Friday, November 24, 2006

Shareholders Seek to Block Equity Takeover

The Blackstone-Equity takeover is really heating up, with some shareholders complaining that the offer price is too low. I wrote about the initial takeover a few days ago -- the largest ever buyout of a real estate investment trust (REIT). Libby Kaiman, a shareholder of Equity Office Properties Trust stock, has filed a lawsuit in Illinois’ Cook County Circuit Court on Nov. 22 against the company’s management, including founder Sam Zell, to block the REIT’s $36-billion sale to New York-based Blackstone Group. Larry Kolker, an attorney with the firm, says the court will likely consolidate the suit as a class action if other shareholders file. “Kaiman hopes this suit will block the sale, unless the fiduciaries of the company can show they are causing value to be maximized,” Kolker told real estate media company No court date has been set yet, Kolker says.

There have been several news stories in the business media in which some analysts say that EOP may not have received the best price for the deal. “James Core, head of real estate investments at Cohen & Steers Inc. – which held 38.9 million shares as of September 2006 – stated EOP is ‘worth a lot more’ than $48.50 a share,” according to the suit.

And why do they think its worth a lot more? Because real estate provides higher returns they virtually any other investment and they don't want to be pushed out of the Equity gravy-train unless they have been adquately compensated. Stay tuned....this story will likely heat up further.

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