The REIT's board of trustees has not changed the recommendation on the pending transaction with Blackstone, says the company in a Jan. 22 statement. EOP's shareholders are scheduled to meet on Feb. 5 to vote on the merger agreement. Blackstone's offer is for $48.50 per share, cash, or about $20 billion, roughly $1.5 billion less than Dove's offer. Both deals include taking on about $16 billion in EOP debt. Richard D. Kincaid, chief executive officer of EOP, has said that a deal this size is going to incur many reactions.
The Blackstone deal is for cash to be paid for the shares, but the partnership's offer is payable 60% cash and 40% in Vornado shares, and would also offer the option for EOP shareholders to exchange their units for shares of Vornado Realty LP. Vornado said in a statement Wednesday that if the deal closed, the company would acquire and retain about half of EOP's assets in the major markets on the coasts, and the other two partners would acquire the rest of the properties. EOP has a total office portfolio consisting of whole or partial interests in 580 buildings comprising 108.6 million sf in 16 states and the District of Columbia.
In the statement, Vornado said it will fund the acquisition by issuing $10.6 billion in value of its shares and units and the balance with debt. The company also says it would sell or co-venture certain assets as part of this purchase. The partnership had included Cerberus Capital Management, but the finance firm allegedly dropped out of the deal on Jan. 16.
Blackstone has a $200-million break-up fee that it would receive if the EOP goes with another offer. A Blackstone spokesman tells GlobeSt.com that his company's deal is much more solid than the new offer. "An alternative proposal, relying on the potential issuance many months from now of more than $10 billion in stock, trading at near record prices, is inferior and carries vastly more risk than Blackstone's all cash deal closing in approximately two weeks," he says. A Vornado spokeswoman told GlobeSt.com in an earlier interview that it cannot comment on the Blackstone statement.
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