Lehman Brothers Holdings Inc. confirmed its will buy the 26.5% stake in Archstone it doesn't already own for $1.58 billion, ending a high-stakes battle over the control of the apartment giant.
The Wall Street Journal late Thursday reported the failed investment bank, which emerged from bankruptcy under a liquidation plan earlier this year, planned to buy the stake from Bank of America Corp. (BAC) and Barclays PLC (BCS), which together partnered with Lehman to buy Archstone in a 2007 leveraged buyout valued at $22 billion.
Archstone owns more than 70,000 apartment buildings in the U.S. and Germany. Lehman initially owned a 47% stake in the company and the banks owned the rest.
Late last fall, Equity Residential (EQR), chaired by Chicago real-estate investor Sam Zell, made a bid to buy half of the two banks' 53% stake in Archstone for $1.33 billion. But Lehman didn't want to share control of Archstone, setting off a complex battle for the past six months between Lehman and Zell.
To block Zell, Lehman exercised its contractual right to match Equity Residential's bid, buying the 26.5% interest held by Bank of America and Barclays itself for $1.33 billion. That left Lehman with 73.5% of Archstone.
"With full ownership of Archstone, we will now be able to move forward and pursue monetization opportunities for the company," said Lehman's Chairman Owen Thomas in a statement Friday. "This transaction protects Lehman's substantial investment, provides stability and gives us control of Archstone's future."
Equity Residential didn't get any piece of Archstone, but the company wound up getting paid $150 million in break-up and termination fees.
