The SL Green bid includes about $44.89 to $31.68 in cash per share as well as $13.21 of SL Green shares for each Reckson one. The total value is $4.13 billion. SL Green would also pick up about $2 billion of Reckson debt. The deal was first reported by GlobeSt.com in August.

The Icahn/Macklowe offer is certainly new to the table, since Reckson sent a letter to shareholders on Nov. 14 encouraging them to vote in favor of the merger with SL Green as it was the best bid the company received.

Ross Nussbaum, an analyst with Bank of America, said in a statement that the Icahn/Macklowe offer would represent a 10% premium to his $45 NAV estimate. Previously, Nussbaum said Reckson was leaving up to $2 per share on the table, but expected the deal to be approved by shareholders providing no other offer was made.

The merger has run up against opposition, especially from shareholder Arnhold and S. Bleichroeder Advisors LLC, who sent a letter to Reckson's board of directors on Oct. 30 to inform the company it plans to vote all its 835,000 shares against the merger. The shareholder was concerned that Reckson did not entertain enough bids, especially due to the fact that about one-third of the company's portfolio is to be sold back to a group headed by Scott Rechler, Reckson's CEO, and therefore shareholders were not getting the best value for their shares.

Nussbaum's statement said that should the Icahn/Macklowe offer actually surface the shareholders meeting will be postponed. Should it not come to light, "we can't help but wonder whether [Reckson] holders would take their chances and vote the SLG offer down." Arnhold and S. Bleichroeder declined to comment on today's news.

Days after the shareholder's letter to Reckson, analysts from various companies, including Citigroup, Credit Suisse and Institutional Shareholder Services, issued reports encouraging shareholders to vote for the merger.

Credit Suisse noted in its report that remarketing the company would be unlikely to garner a higher price due to the fact that the REIT market had sold off 4% in the last three days (before its report) and that the company would be marketed on significantly softer quarter three results. Reckson's Q3 results showed lower than expected funds from operation. A year before the diluted FFO were $51.7 million, or $0.61 per share compared to Q3 2006's diluted FFO of $42.6 million of $0.50 per share. Reckson's CEO Scott Rechler said in a release that while he wasn't happy with the results, he wasn't surprised either. "These trends are consistent with some of the pressures that we have been seeing in the competitive market recently and consistent with the rationale for our pending transaction with SL Green," he said in the Q3 statement.

But despite the company's Q3 results, Icahn/Macklowe has offered to pay more than SL Green. From the beginning of debates Mack-Cali had been cited as a willing potential buyer after Mack-Cali CEO told the Wall Street Journal that he definitely interested in bidding.

Despite Icahn/Macklowe's bid, SL Green has the ability to match another buyer's bid, according to the merger agreement. But Nussbaum said he does not expect SL Green to up their bid. "While [SL Green] could up their bid, we don't envision a bidding war. SL Green has previously been a disciplined buyer. Putting a higher number on the table would impact management credibility in our view." Should the deal fall through, SL Green would receive a $100-million break-up fee plus up to $13 million in reimbursement of expenses.

SL Green had no comment at this point.

Instant Insights /

UPDATE: Green Could Lose Reckson to Icahn/Macklowe

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