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Blackstone wins battle for Equity Office08/02/2007. Source: AltAssets. 
 US buy-out giant The Blackstone Group has defeated Vornado Realty Trust in the auction of Equity Office Properties Trust, a large publicly traded owner and manager of office properties in the US. Shareholders of Equity Office have approved the $39bn offer at a special meeting. This is the biggest buy-out transaction to date.
Over 92 per cent of the total shares that voted were in favour of the transaction, according to a statement. Subject to satisfaction of all closing conditions, Equity Office expects the merger to be completed on or about 9 February 2007.
Under the terms of the merger agreement, following consummation of the merger, Equity Office's common shareholders will be entitled to receive $55.50 in cash, without interest, for each common share of beneficial interest of Equity Office that they own immediately prior to the effective time of the merger. In exchange for each share issued and outstanding immediately prior to the effective time of the merger, holders of Equity Office's 5.25 per cent series B convertible, cumulative preferred shares and 7.75 per cent series G cumulative redeemable preferred shares will be entitled to receive one of the 5.25 per cent series B convertible, cumulative preferred shares and one of the 7.75 per cent series G cumulative redeemable preferred shares of the surviving entity of the merger, respectively, with substantially similar terms as the Equity Office preferred shares.
After the completion of the merger, the surviving entity in the merger will be liquidated into Blackstone affiliate Blackhawk Parent. In the liquidation, each holder of a share of the 5.25 per cent series B cumulative preferred stock will be entitled to receive $50 per share in cash plus any then accumulated but unpaid dividends, and each holder of a share of the 7.75 per cent series G cumulative redeemable preferred stock will be entitled to receive $25 per share in cash plus any then accumulated but unpaid dividends.
In addition, in connection with the merger of Equity Office's operating partnership, its limited partners will be entitled to receive $55.50 in cash, without interest, for each unit of partnership that they own in the partnership, or in lieu of such cash consideration, qualified limited partners that properly elected to do so will be entitled to receive newly issued six per cent class H preferred units in the surviving partnership on a one-for-one basis.
Vornado said in a statement that it 'concluded that the premium it would have to pay to top Blackstone's latest bid, protected by a twice increased break-up fee, would not be in its shareholders' interest.'
Prior to the announcement of this deal, the largest ever buy-out transaction was the $33bn buy-out of HCA. The US healthcare services company was acquired by a private equity consortium comprising Kohlberg Kravis Roberts & Co., Bain Capital and Merrill Lynch Global Private Equity, and HCA founder Dr Thomas F Frist, Jr.
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