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April 15 (Bloomberg) -- CommonWealth REIT rejected a $2.9 billion buyout offer by shareholders Corvex Management LP and Related Cos., and said it adopted board rules designed to thwart unsolicited takeover attempts.

The $24.50-a-share bid from Corvex and Related was conditional and didn’t include a financing plan, Newton, Massachusetts-based CommonWealth said in a statement today. The real estate investment trust, incorporated in Maryland, also said it had adopted provisions of the state’s Unsolicited Takeovers Act, which it believes means board members “may only be removed ‘for cause,’ and that no such cause exists.”

CommonWealth is trying to fend off Corvex and Related, which said last month they would try to remove the board if their takeover bid wasn’t accepted. The investors own 9.2 percent of the stock, making them the largest shareholders.

“It is disgraceful that CWH would unilaterally attempt to take away a right shareholders have had since 1986 solely in an effort to further entrench its underperforming leadership team,” Corvex and Related said in an e-mailed statement today. “This latest effort is in our and our lawyers’ view completely invalid under Maryland law.”

Corvex and Related have told the trustees in detail the third-party debt financing it would use in a takeover “and the combination of sources that will provide for a fully financed offer,” Joanna Rose, a spokeswoman for the investors, said in an e-mail. Deutsche Bank AG is the financial adviser to the shareholder group.

Management Company

CommonWealth’s five-member board of trustees includes President Adam Portnoy and his father, Barry Portnoy, a company founder. They also own Reit Management & Research LLC, or RMR, the external management company for the REIT.

Corvex, founded by activist investor Keith Meister, and Related, led by Chief Executive Officer Jeff Blau, said last week that they delivered to CommonWealth a formal demand for the company set a record date to determine the shareholders entitled to vote to remove the trustees. CommonWealth said today the consent solicitation is invalid because of its move.

Rather than pursue a sale, the REIT plans to stick to its strategy of concentrating on urban office properties, selling non-core assets and cutting debt.

CommonWealth fell 1.9 percent to $22.48 at the close in New York.

To contact the reporters on this story: David M. Levitt in New York at; Brian Louis in Chicago at

To contact the editor responsible for this story: Kara Wetzel at

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