Lehman Brothers Holdings Inc. (LEHMQ) said Archstone, its largest real estate asset, is worth “at least” $1 billion more than the $5 billion equity value implied by Equity Residential’s bid for a stake in the apartment owner.
Lenders Bank of America Corp. (BAC) and Barclays Plc (BARC), who are selling the interest, failed to provide Lehman with adequate information to trigger its 10-day notice period for matching Equity Residential’s offer, Lehman said today in a filing with the U.S. Securities and Exchange Commission. Lehman owns 47 percent of Archstone.
Equity Residential, the Chicago-based multifamily investor founded by Sam Zell, said on Dec. 2 that it had agreed to buy 26.5 percent of Archstone from Bank of America and Barclays for $1.33 billion, contingent on Lehman not exercising its right to match the offer.
“Lehman believes that the EQR purchase price does not take into consideration the value of Archstone’s platform, including its management, which Lehman believes is the best in the industry, nor does it take into account Archstone’s valuable strategic position within the apartment industry,” the estate of the bankrupt securities firm said in today’s 8-K filing with the SEC.
Lenders and Equity Residential (EQR) timed the bid for Archstone just prior to Lehman’s hearing to confirm its joint Chapter 11 reorganization plan and the election of a new board “to optimize the chance Lehman will not exercise its rights,” according to the filing. The hearing is scheduled to begin tomorrow.
Bank of America and Barclays also failed to comply with their agreement with Lehman by granting Equity Residential an option to buy an additional 26.5 percent of Archstone if Lehman didn’t exercise its rights to match the offer on the first piece, Lehman said in the filing.
Brandon Ashcraft, a spokesman for Barclays, said he had no immediate comment. Representatives for Bank of America and Equity Residential didn’t immediately respond to requests for comment.
The estate of Lehman Brothers is trying to raise money for a possible counterbid to Equity Residential’s deal, according to a person with knowledge of the situation. The defunct securities firm is in discussions with investors including Blackstone Group LP and Brookfield Asset Management Inc. to arrange financing, said the person, who asked not to be identified because the negotiations are private.
To contact the reporter on this story: Hui-yong Yu in Seattle at firstname.lastname@example.org
To contact the editor responsible for this story: Kara Wetzel at email@example.com