US investment fund Blackstone Group is to buy leading US real estate firm Equity Office Properties Trust for about $36 billion, the two companies said today, in a record deal for a private investment fund.
Blackstone is to acquire all of Equity Office's outstanding common stock for $48.50 per share in cash in a record acquisition by an investment fund, the groups said in a joint statement. The total sum includes debt of $16 billion.
EOPT owns and manages 580 buildings across 16 US states.
The previous record set by an investment fund dated from July 24, when Bain Capital, Kohlberg Kravis Roberts (KKR) and Merrill Lynch purchased Hospital Corporation of America for $33 billion, including $11.7 billion in debt.
The Equity Office board has unanimously approved the transaction, but it must also be given a green light by shareholders at a special meeting for which a date has not yet been set. Acquisition financing will be led by Goldman, Sachs and Co, Bank of America, and Bear Stearns.
Once the deal has been completed, probably in the first quarter of 2007, Equity Office will be merged into a Blackstone affiliate.
Equity Office, which operates through its various subsidiaries and affiliates, is the biggest US publicly held company owning and managing office buildings.The company has a market capitalisation of about $15.7 billion and annual sales of $3.4 billion.
The Blackstone Group, a private investment firm founded in 1985 and managing $67 billion in investments, has almost $13 billion invested in real estate.
The deal comes amid a flurry of such activity by US investment funds in recent months. According to the consulting group Dealogic, the total amount of such transactions has soared to $320 billion in the US so far this year and $563 billion worldwide, an increase of 60% from the 2005 total of $350 billion.
