Sam Zells Equity Office Properties (EOP) is to take over fellow US company Spieker Properties in a $7.2bn deal. It will see EOP grow to a $28bn office company, with 11.52m m2 of office space across 616 buildings in the US.
EOP is already the largest publicly-held owner and operator of office space in the US with 9.2m m2 of space in 380 buildings. Spieker has 3.6m m2 of space in California and the Pacific Northwest. EOP will also acquire Spiekers 1.25m m2 industrial portfolio and 157,900m2 of development projects.
EOP will pay $1.085bn in cash and issue around 118.6m new EOP shares. It will take on around $2.1bn in debt and $431m in preferred stock. EOP will gain a $160m break-up fee if the deal is not completed within certain conditions. Shareholders will receive $13.50 in cash and 1.49586 EOP shares for each Spieker share.
The takeover increases EOPs presence in West Coast markets: San Francisco Peninsula, San Jose, Los Angeles, Orange County and Seattle.
Chairman Zell said: “The merger is consistent with Equity Office strategy since we went public in 1997. Weve focused on building critical mass in high job-growth office markets with barriers to new supply, the hallmark of Spiekersportfolio.”
