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Blackstone has topped Vornado's $52 per share bid for the Equity Office REIT, the largest owner-operator of office properties in the U.S., with an offer of $54 per share. If it goes through, the deal will be the biggest LBO in history. Blackstone's offer is all-cash while Vornado's is 60% cash and 40% Vornado shares. Vornado had begun due diligence with Equity Office ahead of the formalization of their offer on January 31, but Blackstone's new bid beat that date by a week. The Vornado offer is worth $37.6 billion including debt and Blackstone's $38.3 billion. The Equity Office board of trustees continues to recommend that shareholders accept Blackstone at their February 5 vote. The Equity Office bidding war reflects the ongoing consolidation of the real estate market: Global real estate mergers hit a record $414.3 billion in 2006, up 66% from the year before. Equity Office shares rose 3.9% to $54.77 late yesterday afternoon.

• Sources: Bloomberg, MarketWatch, Reuters
• Related commentary: Vornado Group Outflanks Blackstone in New Bid for Equity Office REIT, Blackstone Group's 'Zell Buyout' Is Questionable At Best, Blackstone Acquiring Equity Office in Largest Private-Equity Deal Ever
• Potentially impacted stocks and ETFs: Equity Office Properties Trust (EOP), Vornado Realty Trust (NYSE:VNO). Competitors: Boston Properties Inc. (NYSE:BXP), Mack-Cali Realty Corp. (NYSE:CLI), Vornado Realty Trust (VNO). ETFs: iShares Cohen & Steers Realty Majors (NYSEARCA:ICF), Vanguard REIT Index ETF (NYSEARCA:VNQ), WisdomTree Dividend Top 100 (NYSEARCA:DTN), streetTRACKS DJ Wilshire REIT (NYSEARCA:RWR)

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Source: Blackstone Back at the Table; Raises Equity Office Bid to $38.3 Billion