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Equity Endorses Blackstone Bid
Board Rejects Vornado's Larger Offer in Takeover Attempt

Bloomberg News
Saturday, February 3, 2007

Equity Office Properties Trust, the target of the largest real estate takeover, yesterday rejected a $41 billion offer from Vornado Realty Trust, saying a $38.3 billion cash bid by Blackstone Group L.P. is less risky for shareholders.

Equity Office said a sale to New York-based Vornado would take months to complete, while a buyout by Blackstone would close within days. Given the time delay, Equity Office put the value of Vornado's bid of $56 a share in cash and stock at $54.28 to $54.88. Blackstone's offer is $54 a share.

The stock closed yesterday at $55.38, up 23 cents a share.

Equity Office of Chicago postponed a vote on the Blackstone bid by two days to Feb. 7 to give shareholders time to review its stance on the Vornado offer, according to a statement filed yesterday with the Securities and Exchange Commission. If Blackstone's bid is approved, the purchase would be completed on or about Feb. 9.

The decision by the board of the biggest U.S. office landlord is a setback to Vornado chief executive Steven Roth, who first pursued the company in July. Now Blackstone's Stephen A. Schwarzman must win approval of Equity Office investors to complete the biggest leveraged buyout ever and gain 543 buildings across the country.

Equity Office's board said in its SEC filing that Vornado's offer "fails to adequately compensate Equity Office shareholders for the increased risk when compared to the Blackstone transaction, whose closing conditions have largely been satisfied."

The board "unanimously voted to reaffirm its recommendation" of Blackstone's bid, Equity Office said.

Equity Office said that even though four Vornado shareholders holding 7 percent to 9 percent of Vornado stock indicated they would approve the sale, Equity Office is still concerned that shareholders will reject the transaction.

Proxy adviser Glass, Lewis & Co. recommended that investors vote against the Blackstone bid. Vornado's offer is "financially superior" and allows shareholders to continue to own "important office property assets," the proxy adviser said in a report.

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