The boom in global merger and acquisition activity reached new proportions as Blackstone Group, the private equity house, launched the biggest-ever public-to-private deal, worth $36bn (£19bn).
Its acquisition of Equity Office Properties Trust (EOPT), America's largest owner of office space, was just the largest of a slew of deals being digested by Wall Street yesterday. Companies with a market value totalling more than $50bn were the subject of agreed takeovers within the space of a few hours.
EOPT, founded and chaired by the real estate billionaire Samuel Zell, owns 590 buildings comprising more than 105 million sq ft of office space across the country. Blackstone is paying $20bn for the company and taking on its $16bn of debt. It is the most potent example yet of the muscle of the biggest private equity firms, in a year that has already seen the toppling of a 17-year-old record for the biggest take-private deal. That was Kohlberg Kravis Roberts' 1989 acquisition of RJR Nabisco, which spawned the book and film Barbarians at the Gate.
"We are extremely excited about this landmark transaction with Equity Office, which represents the largest private equity deal in history," said Jonathan Gray, senior managing director at Blackstone.
Other deals yesterday included two in the mining sector, the $26bn acquisition of Phelps Dodge by Rowan McMoRan to create North America's largest copper company, and the $2.5bn takeover of Oregon Steel Mills by Russian steel maker Evraz.
Mike Lenhoff, strategist at Brewin Dolphin, said: "Intense global competition is encouraging companies to try and get together to reap economies of scale, reduce their cost output and, as in the case of the miners, to secure resources they may not have access to."
In London, takeover speculation continued to swirl around stocks such as Home Retail, the owner of Argos. Across Europe, M&A volumes are set to hit US$1.2 trillion this year, matching the record in 2000, according to figures from Morgan Stanley.
Rumours abounded on Wall Street yesterday that the EOPT deal would trigger other private equity acquisitions in the real estate sector. Private buyers are often more comfortable adding more debt to stable assets such as property than investors in the public markets.Reuse content