Vornado Realty Trust said in a statement issued late Sunday thatit will pay the full cash portion of its $41 billion offer forEquity Office Properties Trust upfront and with certainty. Thecompany says that, if accepted by EOP, that it will commence atender offer to buy up to 55% of EOP's shares for $56 per share incash, and will complete a follow-on merger.the EOP board said itprefers Blackstone's bids because they are all-cash. Monday, theboard reaffirmed its commitment to Blackstone, and said the new$55.50 per share offer is better, and less risky, than Vornado'sdeal. Vornado's tender offer would be for a minimum of 51% of EOP'sshares and would not be conditioned on a shareholder vote, asopposed to its most recent offer. According to the Sundaystatement, if the tender is oversubscribed, shares would beprorated and unpurchased shares would receive Vornado shares valuedat $56 per EOP share in the merger. However, if less than 51% ofthe shares are tendered, all of the EOP shareholders could receive$56 in cash and Vornado common shares.

Vornado had said earlier that it will fund the acquisition byissuing $10.6 billion in value of its shares and units and thebalance with debt. The company said that it is in discussions tosell up to $10 billion of EOP's assets at closing to StarwoodCapital and Walton Street Capital, and to sell an additional $10billion of assets within the first year after closing. The companyalso said it expects to sell or co-venture other selected assets ofthe portfolio. EOP has a total office portfolio consisting of wholeor partial interests in 580 buildings comprising 108.6 million sfin 16 states and the District of Columbia.

The EOP board said Monday that it prefers to stick with theBlackstone offer. "The alternative transaction proposed in theVornado letter would still subject Equity Office to market andevent risks over the four to six months that would be required toclose the entire transaction, as well as the risks of the Vornadoshareholder vote and the Vornado Board's 'fiduciary out' from itscovenant to recommend the transaction," said the EOP board in astatement Monday. A Vornado spokeswoman could not be reached forcomment.