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DENVER-Locally based Archstone-Smith Trust signed away its public existence Tuesday morning, agreeing to be taken private for $22.2 billion by a partnership of Tishman Speyer and Lehman Brothers. The New York City-based duo agreed to pay $60.75 per share in cash--a 22.7% premium over Friday's share price prior to initial reports--and assume $6.3 billion of existing debt.

Assuming shareholders affirm the unanimous approval by Archstone's board of directors, the transaction likely will close in the third quarter of this year. Archstone-Smith chairman/CEO R. Scot Sellers has agreed to terms of employment that will keep him in charge of the company. In afternoon trading Tuesday, shares of Archstone-Smith were trading at $60.79, up more than 10% on the day.

Archstone-Smith, an S&P 500 company, owned all or part of 86,014 units in 344 properties as of the end of March and had 3,500 employees. The company's portfolio is concentrated in many of the most desirable neighborhoods in the Washington, DC metropolitan area, Southern California, the San Francisco Bay Area, the New York metropolitan area, Seattle and Boston.

Tishman Speyer's multifamily portfolio totals approximately 11,500 units, located primarily in New York City. Almost all of it was acquired in October, when with Blackrock Inc. it paid $5.4 billion for the Stuyvesant Town and Peter Cooper Village properties from MetLife, Inc, as GlobeSt.com previously reported.

Archstone-Smith will pay its last regular quarterly dividend on May 31 to common shareholders of record as of May 16. Unitholders of Archstone-Smith Operating Trust, the operating entity through which Archstone-Smith conducts substantially all of its business and which owns substantially all of its assets, will be offered the opportunity to elect to receive $60.75 per unit in cash or a newly issued preferred unit in Archstone-Smith Operating Trust. With regard to Archstone-Smith's Series I preferred shares, at the election of the buyer it is currently expected they either will be redeemed at the liquidation preference of $100,000 per share plus accrued but unpaid dividends through the closing date of the merger or be converted into preferred shares of the surviving entity in the merger.

Bank of America is providing some or all of the debt financing associated with the transaction. Archstone-Smith's financial and legal advisors were Morgan Stanley and Hogan & Hartson LLP, respectively. Tishman Speyer's legal counsel included Wachtell, Lipton, Rosen & Katz, DLA Piper LLP, Schulte Roth and Zabel LLP and Veneble LLP. Weil Gotshal & Manges LLP and Cadwalader, Wickersham & Taft LLP provided legal advice to Lehman Brothers Inc. Kirkland & Ellis LLP provided legal advice to Bank of America.

Instant Insights /

Archstone OKs Tishman, Lehman $22B Bid

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