Record-Smasher: Equity Office Shareholders OK Blackstone Bid

Yesterday I wrote that Blackstone Group might be better off losing the Equity Office deal to Vornado, considering that it had been forced to raise its bid – and thereby reduce its return expectations — by 14.4 percent. And I received emails from six Blackstone LPs – all of whom agreed (although my guess is they’ll still answer the co-invest bell).

But then Vornado came to its senses and bailed, thus leaving Blackstone as the only suitor standing. And just a few minutes ago came an official announcement that Equity Office shareholders have approved the Blackstone bid, with 92% of the total shares voted saying “Aye.”

The accepted bid will be the largest leveraged buyout in history, with a total value of approximately $39 billion. More analysis to come later today. In the meantime, here’s the press release:

Equity Office Properties Trust (NYSE: EOP) announced that the common shareholders of Equity Office have approved the merger and merger agreement with affiliates of The Blackstone Group at a special meeting held today, Wednesday, February 7, 2007. Over 92% of the total shares that voted were in favor of the transaction. Subject to satisfaction of all other closing conditions, Equity Office expects the merger to be completed on or about February 9, 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% Series B Convertible, Cumulative Preferred Shares and 7.75% Series G Cumulative Redeemable Preferred Shares will be entitled to receive one of the 5.25% Series B Convertible, Cumulative Preferred Shares and one of the 7.75% Series G Cumulative Redeemable Preferred Shares of the surviving entity of the merger, respectively, with substantially similar terms as the Equity Office preferred shares.

As promptly as practicable after the completion of the merger, the surviving entity in the merger will be liquidated into Blackhawk Parent LLC, an affiliate of The Blackstone Group. In the liquidation, each holder of a share of the 5.25% Series B Cumulative Preferred Stock will be entitled to receive $50.00 per share in cash plus any then accumulated but unpaid dividends, and each holder of a share of the 7.75% Series G Cumulative Redeemable Preferred Stock will be entitled to receive $25.00 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 6% Class H preferred units in the surviving partnership on a one-for-one basis.