CHICAGO-Following a rival bid in the largest real estate transaction ever, Blackstone has submitted a new offer for its purchase of locally based Equity Office Properties Trust, and has also added some protection in case its deal goes sour. New York City-based Blackstone has boosted its offer from $48.50 per share to $54 per share, payable in cash in a transaction valued at $38.3 billion.

The board of trustees at EOP approved the merger amendment, it said in a statement issued Jan. 25. The board is also still considering a rival offer by Dove Parent LLC (an entity formed by Vornado Realty Trust, Starwood Capital Group Global LLC and Walton Street Capital LLC) to acquire Equity Office for $52 per share, and has directed management to engage in discussions with the joint venture. Though EOP shareholders are scheduled to vote Feb. 5 on an acquisition offer from Blackstone, the locally based REIT has begun supplying diligence information to allow Dove Parent an opportunity to present a definitive proposal by Jan. 31.

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 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 a previous 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 had a $200-million break-up fee that it would receive if the EOP goes with another offer, but in a statement on Jan. 25, the company says that in conjunction with the new offer, it has upped the termination fee to $500 million. A Blackstone spokesman tells that his company’s deal is much more solid than Vornado’s 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 did not return calls for comment.

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