Equity Office Announces Amendment to Merger Agreement with Blackstone
January 25 2007 - 8:02AM
Business Wire
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.
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