FOSTER CITY, CA-Locally headquartered Gilead Sciences recently gained an additional month to kill without penalty a planned $137.5-million acquisition of property bordering its 17-building campus. The acquisition, tentatively scheduled to close in January, would net the public biopharmaceutical company one additional office building, 30 acres entitled for an additional 542,000 square feet of development, and the right of first refusal to acquire the rest of EFI’s adjacent real estate assets, including an adjacent 10-story office building.
The company tied up the property in October and made a $5-million refundable deposit to the seller, Electronics for Imaging Inc, a locally based publicly-held maker of printers, print servers, inks and related software that began marketing its 35-acre property in May as part of a downsizing effort. Per the agreement, Gilead had until Dec. 12 to terminate the deal without losing its deposit or commit to the deal by putting up an additional $5 million that, along with the initial $5 million, presumably would have become non-refundable. Neither Gilead nor EFI have filed the actual agreement with the SEC.
Instead, on deadline day, the Gilead and EFI agreed to extend Gilead’s termination right to Jan. 13, 2009, according to a Dec. 18 filing with the SEC by EFI. Gilead, which in October broadcast the tentative acquisition and the termination deadline, has not yet publicly acknowledged the change in the purchase agreement and did not immediately respond to a Wednesday phone call seeking comment. EFI’s SEC filing does not provide a reason for the extension of Gilead’s right to terminate the deal but does state that the planned January closing date for the deal remains unchanged.
EFI’s headquarters campus is located along East Third Avenue between lakeside and Marsh Drives, across from the Links at Mariners’ Point. EFI received approvals from the Pleasanton City Council several years ago for one million square feet of offices, R&D and light warehousing. The company completed two buildings, a 10-story 300,000-sf office building and a 163,000-square-foot office building.
The EFI office building that Gilead would acquire is a 163,000-square-foot low-rise structure located at 301 Velocity Way, and EFI would lease a portion of the building back until mid-April. The EFI office building for which it has the right of first refusal to acquire is a 10-story, 295,000-square-foot building located at 303 Velocity Way. Subject to the close of the transaction, per the agreement EFI would lease a portion of 301 Velocity Way from Gilead to assist with the transition and relocation of its employees and labs, from the date of closing through April 15, 2009.
As of May, both buildings were subject to synthetic lease agreements that ran into 2014. According to SEC filings, EFI may, at its option, purchase the facilities during or at the end of the term of the leases for the amount expended by the lessor to purchase the facilities–$56.9 million for the 303 Velocity Way Lease and $31.7 million for the 301 Velocity Way Lease.