X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

NEW YORK CITY-Despite competing bids and unsatisfied shareholders, Reckson Associates Realty Corp. has just confirmed it has received the necessary two-thirds of affirmative shareholder votes to be acquired by SL Green Realty Corp.

While the merger announcement was expected to be made Wednesday after the scheduled special shareholder meeting, Reckson Associates Realty Corp. shareholders took another day to agree to the merger. In that time period, SL Green agreed to pay an additional $25 million by increasing its bid by $0.29 in cash per share of Reckson stock, a move certainly part of the last months public turmoil over the deal.

The merger agreement, which was announced in August, had SL Green paying between $44.89 to $31.68 in cash per share as well as $13.21 of SL Green shares for each Reckson one and acquire $2 billion in debt. The deal also allowed for a $100 million break-up fee plus up to a $13 million reimbursement of expenses.

But some shareholders felt Green did not assign enough value to the company. Additionally, these shareholders were upset that the merger agreement included the selling by Green of the non-core assets to a team of Reckson management led by Scott Rechler, since SL Green was interested primarily in the core urban assets in the portfolio.

On Oct. 30, GlobeSt.com reported that shareholder Arnhold and S. Bleichroeder Advisors LLC sent a letter to Reckson’s board of directors informing them that the firm would vote against the merger until the non-core assets were re-marketed. The shareholder said in the letter, “We have concluded that these properties (the non-core assets) were inadequately marketed to potential acquirers. Accordingly we believe an open and thorough auction of these assets has the potential to deliver significantly more value to Reckson shareholders.” In the days to follow rumors swirled of several companies interested in the assets, Mack-Cali was among possible candidates.

Despite some shareholder opposition, on Nov. 6 analysts from both Citigroup and Credit Suisse issued opinions encouraging shareholders to approve the deal. Both reports noted it would be almost impossible for Reckson to achieve a higher price for the company due in large part to the lower-than-expected Q3 numbers. “Reckson’s 3Q results came in significantly below expectations, underscoring our view a higher bidder is unlikely to emerge,” said John Stewart and Michael Gorman of Credit Suisse.

On Nov. 9, it was revealed that the Institutional Shareholder Services also recommended shareholders approve the merger with SL Green.

But on Nov. 16 the transaction was reported as running into a major snag. Rome Acquisitions, a joint venture of billionaire investor Carl Icahn and Macklowe Properties, informed Reckson of its intent to acquire the company for $49 per share in an all cash transaction. The JV would also assume Reckson’s $2 billion of debt. Rome asked for 10 days to complete a due diligence process before entering into an agreement. The bid was submitted just four business days before shareholders were scheduled to vote on the merger with SL Green.

From the beginning SL Green called into question the seriousness of the proposal. In a statement issued the day after Rome’s bid, company officials said, “We have doubts that it is a credible bid. The proposal is from a group that has not had access to any non-public information and has conditioned its offer on due diligence.”

Separately, SL Green president and CEO Marc Holliday said his company would not match or exceed the $49 per share bid. At an investor conference in early December, Holliday said, “We don’t chase deals that don’t make sense. We don’t do bidding wars. [For Reckson] we just don’t believe the value is there.”

With the new offer on the table, on Nov. 20 GlobeSt.com reported that Reckson postponed its shareholder meeting until Nov. 28. And then a week later Reckson put off the shareholder meeting again since the company was still waiting for a definitive proposal from Rome.

Two days later, on Nov. 29, it was revealed that Mack-Cali Realty Corp. entered into the mix, agreeing to partner with Icahn and Macklowe in the acquisition of Reckson. But just as quickly as it entered, Mack-Cali pulled out. By Nov. 30 both Mack-Cali and Macklowe had pulled out of the bid, leaving Icahn to vie for the Reckson on his own.

But the break-up of this partnership didn’t deter Icahn. On Dec. 4 GlobeSt.com reported that Icahn offered a second bid through American Real Estate Partners LP, a company he owns a 90% share in. Again he agreed to acquire Reckson for $49 per share, but this time it wouldn’t be in an all cash transaction. This bid offers $1 billion in cash and $3.3 billion in a new class of AREP Preferred Units.

Reckson acknowledged the bid and said the board would need time to review the proposal, but the shareholder meeting was not postponed again. Later that day, Reckson’s board encouraged shareholders to vote in favor of the SL Green merger, a position the board had taken from the beginning and remained consistent with throughout. Following that Icahn pulled back his bid and shareholders were able to vote on the merger without a second deal on the table.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 3 free articles* across the ALM subscription network every 30 days
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

Dig Deeper

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.