CHICAGO – Vornado Realty Trust (VNO) said Wednesday it was withdrawing its $23.2 billion cash-and-stock buyout offer for Equity Office Properties Trust (EOP), ending a bidding war hours before the real estate company's shareholders were scheduled to vote on a competing offer from the private equity firm Blackstone Group.
The Paramus, N.J.-based real estate investment trust said the premium it would have to pay to top Blackstone's latest all-cash bid — protected by a twice increased breakup fee — would not be in its shareholder's interest.
The announcement sent Vornado's stock up $4, or 3.1 percent, to $131.00 in morning trading on the New York Stock Exchange. Equity Office shares fell 59 cents, or 1 percent, to $55.46.
Blackstone raised its bid for the Chicago-based office landlord to $23 billion, or $55.50 per share, on Tuesday.
The all-cash deal has the support of Equity Office trustees, even though it was less than the $56 per share in cash and stock offered by Vornado.
Vornado's bid had been deemed too risky by Equity Office because of the length of time it would take to complete and the need for Vornado shareholder approval. Analysts said this week that Vornado would have to raise its offer to nearly $60 per share if it wanted to sway Equity Office to drop the Blackstone deal.
Equity Office shareholders are to vote on Blackstone's bid Wednesday morning, and the acquisition is scheduled to close Friday if it is approved.
Including assumed debt, Blackstone said its latest offer is valued at $39 billion — making it the largest-ever private equity buyout bid, according to data from Dealogic.
A Blackstone spokeswoman declined to comment Wednesday.
Equity Office is the nation's largest publicly traded office landlord and owns more than 580 buildings totaling more than 105 million square feet nationwide. Its properties include WorldWide Plaza in Manhattan and the Civic Opera building in Chicago.