Equity Office Properties Trust
said Friday that it agreed to acquire
for $2.8 billion in cash and stock.
Shares in Cornerstone rocketed on the news, rising 2 1/16, or 14%, to 16 15/16 around midday. (It closed down 1 1/2, or 5.8%, or 24 3/16.) Shares in Equity Office dropped 1 7/16, or 6%, to 24 1/4, (Shares closed up 1 15/16, or 13%, at16 13/16.)
The deal between the two real estate investment trusts will add roughly 24% more office space to Equity Office, the largest publicly traded commercial building owner and manager in the country.
Under the terms of deal, Cornerstone's shareholders will receive $18 a share, or 0.7009 share of Equity Office, or a combination of cash and stock, for each Cornerstone share. Equity Office is also assuming $1.8 billion in debt.
"This merger captures for shareholders of both entities the true benefits of consolidation in our industry," said Samuel Zell, the billionaire financier who is chairman of Equity Office, which is based in Chicago.
Zell noted in a statement that the deal with Cornerstone, which is based in New York, would give Equity Office high-quality properties in booming markets that are difficult to enter.