Blackstone boosts cash offer for Equity Office

Private equity firm Blackstone Group raised its cash takeover bid for Equity Office Properties Trust to $23 billion Tuesday, escalating a down-to-the-wire bidding war for the real estate company.

Equity Office told shareholders to vote for the deal at a special meeting this morning, even though it was still less than a $23.2-billion bid from rival suitor Vornado Realty Trust.

Blackstone’s newest bid is for $55.50 a share, up nearly 15% from its first offer in November. Tuesday’s sweetened offer was a nearly 3% increase from Blackstone’s last bid of $54 a share, or $22.3 billion. But it still fell short of the $56-a-share cash-and-stock proposal from Vornado.

Including assumed debt, Blackstone said its latest offer was valued at $39 billion.

The private equity firm’s latest offer came two days after Vornado announced a proposal to pay the cash portion of its bid upfront to address concerns about the speed and certainty of its offer.

The Equity Office board said the net present value of Vornado’s $56-a-share bid was in the range of $54.81 to $55.07 a share, even after taking into account the receipt of dividends. Equity Office continued to say Tuesday that it thought the Vornado offer was too risky to accept.

But analysts said Vornado might raise its bid again, hoping to change shareholders’ minds in the final hours before they cast their ballots. “It might not be over,” said Tom Burnett, director of research at Wall Street Access.

Investors seemed to agree, sending shares of Equity Office to levels above Blackstone’s latest bid. Equity Office shares rose 59 cents, or 1.06%, to $56.05, while Vornado shares gained $1.90, or 1.52%, to $127.