Equity Office: Sharper Elbows in Buyout Battles

With the unprecedented amount of cash sloshing around in private equity’s pockets, it may have been inevitable, but the gloves have come off in buyouts. Late Wednesday, a group of investors offered $38 billion for the nation’s largest office landlord, setting off the biggest buyout battle since the landmark fight for RJR Nabisco nearly two decades ago. The upstart bid for Equity Office Properties, the real estate investment trust that was founded by Samuel Zell, tops a $36 billion deal that Equity Office had reached with the Blackstone Group in November. Either bid would win the crown as the largest buyout ever, surpassing last summer’s $33 billion deal for HCA.
The battle for Equity Office pits some of the most powerful and colorful financiers against each other. Blackstone is controlled by Stephen A. Schwarzman, who has created one of the largest, if not the largest, private equity firms in the nation.
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