Equity Office (NYSE:EOP)
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Equity Office Properties Trust (NYSE: EOP) today announced that it has
amended its merger agreement entered into on November 19, 2006 with
affiliates of The Blackstone Group. Under the terms of the amended
agreement, Blackstone will acquire all of the outstanding common stock
of Equity Office for $54.00 per share, payable in cash, in a transaction
valued at approximately $38.3 billion. The increased purchase price
represents an increase of $5.50 per share, or approximately 11.3
percent, over the $48.50 price per share previously provided. The
increased purchase price also represents a premium of 27.8 percent over
the average closing price of Equity Office’s
shares for the 30 trading-day period prior to November 19, 2006.
The amendment was entered into following receipt by Equity Office of an
unsolicited, non-binding proposal letter received from Dove Parent LLC,
an entity formed by Vornado Realty Trust, Starwood Capital Group Global,
LLC and Walton Street Capital, LLC (the “Third
Party Group”). The non-binding proposal letter
stated that the Third Party Group proposes to acquire Equity Office for
$52.00 per share, payable 60% in cash and 40% in Vornado Realty Trust
shares. Under that proposal, the Third Party Group transaction would
require approval by the Vornado shareholders.
In conjunction with the increased cash purchase price, the termination
fee of $200 million payable to Blackstone under certain circumstances
has been increased to $500 million.
In approving the amendment to the merger agreement, the Board of
Trustees of Equity Office took into account a number of factors,
including (i) the fact that the increased all cash purchase price
offered by Blackstone exceeded the stated value proposed by the Third
Party Group, (ii) the greater speed and certainty of closing and
valuation of the Blackstone transaction, as compared to the Third Party
Group proposal, and (iii) the fact that the amended termination fee,
which represents only 2.1 percent of total equity value, would not
preclude a revised proposal from the Third Party Group or a proposal
from any other potential bidder.
Representatives of Equity Office have met with representatives of the
Third Party Group to discuss its proposal and Equity Office has provided
substantive diligence information to the Third Party Group. Equity
Office will continue to provide diligence information to the Third Party
Group and will cooperate with them so that the Third Party Group will be
in a position, if they so choose, to submit a definitive proposal to
Equity Office by January 31, 2007 for consideration by Equity Office’s
Board of Trustees. There can be no assurance that the Third Party Group
will submit a definitive proposal or, if they do, that Equity Office
will enter into a definitive agreement with the Third Party Group.
Also, as part of the amendment, the consideration to be paid by
Blackstone for the Class A units in EOP Operating Limited Partnership
was also increased from $48.50 per unit to $54.00 per unit, payable in
cash. Qualified holders of Class A units will continue to have the
option (in lieu of cash) to elect to receive preferred partnership units
in the surviving partnership in the merger.
Equity Office’s Board of Trustees has
unanimously approved the amendment to the merger agreement and continues
to recommend the approval of the transaction with Blackstone by Equity
Office’s common shareholders. The special
meeting of shareholders to vote on the merger agreement remains
scheduled to be convened on February 5, 2007. Completion of the
transaction is currently expected to occur on or about February 8, 2007,
subject to the approval of Equity Office’s
shareholders and the satisfaction or waiver of the other closing
conditions. The receipt of financing by Blackstone is not a condition to
completion of the transaction under the merger agreement. Neither
management nor the Trustees of Equity Office are participants in the
buying group.
About Equity Office
Equity Office, operating through its various subsidiaries and
affiliates, is the largest publicly traded owner and manager of office
properties in the United States by square footage. At September 30,
2006, Equity Office had a national office portfolio comprised of whole
or partial interests in 585 office buildings located in 16 states and
the District of Columbia. As of that date, Equity Office had an
ownership presence in 24 Metropolitan Statistical Areas (MSAs) and in
100 submarkets, enabling it to provide a wide range of office solutions
for local, regional and national customers.
EOP Operating Limited Partnership is a Delaware limited partnership
through which Equity Office conducts substantially all of its business
and owns, either directly or indirectly through subsidiaries,
substantially all of its assets.
Forward-Looking Statements
This press release contains certain forward-looking statements based on
current Equity Office management expectations. Those forward-looking
statements include all statements other than those made solely with
respect to historical fact. Numerous risks, uncertainties and other
factors may cause actual results, performance or transactions of Equity
Office and its subsidiaries to differ materially from those expressed in
any forward-looking statements. For example, the unsolicited non-binding
proposal from the Third Party Group may not result in a definitive
agreement for an alternative transaction. Other factors include, but are
not limited to: (1) the failure to satisfy the conditions to completion
of the proposed mergers with affiliates of The Blackstone Group,
including the receipt of the required shareholder approval; (2) the
failure to obtain the necessary financing arrangements set forth in the
commitment letters received by Blackhawk Parent LLC (an affiliate of The
Blackstone Group) in connection with the proposed mergers and the actual
terms of such financings; (3) the failure of the proposed mergers to
close for any other reason; (4) the occurrence of any effect, event,
development or change that could give rise to the termination of the
merger agreement; (5) the outcome of the legal proceedings that have
been, or may be, instituted against Equity Office and others following
the announcement of the proposed mergers; (6) the risks that the
proposed transactions disrupt current plans and operations including
potential difficulties in employee retention; (7) the amount of the
costs, fees, expenses and charges related to the proposed mergers; and
(8) the substantial indebtedness that will need to be incurred to
finance consummation of the proposed mergers and related transactions,
including the tender offers and consent solicitations and other
refinancings of Equity Office and its subsidiaries; and other risks that
are set forth in the “Risk Factors,”
“Legal Proceedings”
and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations”
sections of Equity Office’s and EOP Operating
Limited Partnership’s filings with the
Securities and Exchange Commission (“SEC”).
Many of the factors that will determine the outcome of the subject
matter of this press release are beyond Equity Office’s
ability to control or predict. Equity Office undertakes no obligation to
revise or update any forward-looking statements, or to make any other
forward-looking statements, whether as a result of new information,
future events or otherwise.
Additional Information About the Merger and Where to Find It
In connection with proposed merger transactions involving Equity Office
and EOP Operating Limited Partnership and affiliates of The Blackstone
Group, Equity Office filed a definitive proxy statement with the SEC and
furnished the definitive proxy statement to Equity Office’s
shareholders. Equity Office will promptly file updated materials with
the SEC, including a supplement to the existing proxy statement.
SHAREHOLDERS ARE URGED TO READ CAREFULLY THE PROXY STATEMENT AND, WHEN
AVAILABLE, THE PROXY STATEMENT SUPPLEMENT BECAUSE THEY CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED MERGER TRANSACTIONS. Shareholders can
obtain the proxy statement, the proxy statement supplement when
available and all other relevant documents filed by Equity Office with
the SEC free of charge at the SEC’s website
at www.sec.gov or from Equity Office
Properties Trust, Investor Relations at Two North Riverside Plaza,
Suite 2100, Chicago, Illinois, 60606, (800) 692-5304 or at www.equityoffice.com.
The contents of the Equity Office website are not made part of this
press release.
Participants in the Solicitation
Equity Office and its trustees and officers and other members of
management and employees may be deemed to be participants in the
solicitation of proxies in respect to the proposed merger transactions.
Information about Equity Office and its trustees and executive officers,
and their ownership of Equity Office’s
securities, is set forth in the proxy statement relating to the proposed
merger transactions described above.