LONDON (dpa-AFX) - Bank of America Corp. (BAC) and Barclays Bank Plc (BCS, BARC.L) Friday agreed with Equity Residential (EQR) and Lehman Brothers Holdings Inc. (LEHMQ.PK) to sell their remaining 26.5 percent interest in apartment developer Archstone for $1.58 billion. The closing of the transaction is expected to occur in the second quarter of this year.
The sale to Lehman will be made pursuant to its exercise of right of first offer. Real estate investment trust Equity Residential had planned to buy this 26.5 percent stake if Lehman did not exercise the right of first offer option.
Upon closing of the deal, Bank of America and Barclays will have sold a 53 percent controlling interest in Archstone in two steps for a total purchase price of $2.905 billion. Lehman's estate owns 73.5 percent of Archstone.
In the event of closing of the deal, the sellers will pay an $80 million break-up fee to Equity Residential and Lehman will pay Equity Residential a termination fee of $70 million.
It was in 2007 that Bank of America and Barclays signed an agreement with Lehman for the $22.2 billion leveraged buyout of Archstone-Smith. At the start of the deal Lehman was having 47 percent stake in Archstone, while the banks had 53 percent share. Archstone is a privately-held owner, operator and developer of multifamily apartment properties.
Later in December 2011, Equity Residential came forward to buy 26.5 percent stake in Archstone, however exercising the right to match other offers, Lehman bought the stake from Bank of America and Barclays for $1.325 billion in cash.
Bank of America said Archstone has net debt and third-party preferred securities of about $10.5 billion. As per the deal, the parties have released each other from all claims relating to Archstone.
Bank of America Merrill Lynch and Barclays served as sell-side financial advisors on these transactions. Kaye Scholer and Cleary Gottlieb Steen & Hamilton served as legal advisors to Bank of America. Simpson Thacher & Bartlett and Orrick, Herrington & Sutcliffe served as legal advisors to Barclays.
Bank of America shares closed Thursday's regular trading at $7.14 on the NYSE. In the pre-market activity, the shares are down 0.56 percnent.
On the London Stock Exchange, Barclays is currently trading at 183.05 pence, down 2.25 pence or 1.21 percent, on a volume of 11.13 million shares.
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© 2012 AFX News
