Equity Office Properties (EOP-NYSE) is in a strange situation. The bidders obviously have different math and different valuation beliefs than Main Street; although that is usually the case. Vornado Realty Trust (VNO-NYSE) has bumped its bid now to $56.00 to trump the $54.00 bid from Blackstone. The difference in this bid is that VNO is doing cash and stock, where the Blackstone bid is all cold hard cash money. There is also the $500 million break-up fee that would have to be considered.
Even though this has some implied floors, the 4% premium might not be enough to sway the deal. Equity Office has a $19.5 Billion market cap and that means that they would have to place $10 Billion in VNO shares. With transaction costs and post-market activity that adds more risk. Apparently the market is having teh same concerns because EOP shares are actually DOWN 1.2% at $54.87 pre-market versus $55.55 yesterday at the close. EOP has also traded more than its entire daily volume pre-market with almost 8 million shares trading hands.
You should peruse yesterday’s earnings results. This is being evaluated a value of the land deal more than on a raw cash flow basis, although that is arguable and beauty is obviously in the eye of the beholder.
Jon C. Ogg
January 31, 2007
Top Gaining Stocks
Top Losing Stocks