New Reckson Bid Raises Questions

Updated from 9:44 a.m. EST

Reckson Associates(RA Quote) received a newly shaped bid from Carl Icahn after Mack-Cali(CLI Quote) and Macklowe Properties backed out of a partnership with the financier over the weekend.

The structure of the deal, however, differs sharply from Icahn's previously proposed bid and raises doubts about whether it would ever be accepted by Reckson shareholders or the company's board.

In his new proposal, Icahn offered to buy office landlord Reckson through American Real Estate Partners(ACP Quote), a public company that is 90%-owned by Icahn and owns commercial real estate and casino assets.

Icahn is offering $49 a share for the real estate investment trust, the same price as his previously planned bid with Macklowe and Mack-Cali.

The price is higher than Reckson's current merger agreement with New York City office owner SL Green(SLG Quote). SL Green's cash-and-stock deal values Reckson at about $46 per share, on the basis of Friday's closing price.

Icahn's latest offer, however, uses $1 billion of cash and $3.3 billion in a new class of preferred stock of ACP stock. His previous bid with Macklowe and Mack-Cali was all cash.

If the preferred units are valued at par, the deal would total $49, ACP said in a letter to Reckson.

However, others are questioning whether the preferred stock would really be worth that much.

"Was that even really an offer?" says Dean Frankel, portfolio manager with Urdang Investment Management, which unloaded its Reckson stake last week when SL Green said it would not match the Icahn bid.

Frankel wonders if the new deal is simply Icahn's way of saving face and keeping his word on the $49 offer, given that the new deal is not likely to be accepted because of its structure.