Barry Sternlicht’s Starwood Loses Monmouth to Sam Zell’s EQC a Second Time


Sam Zell 2, Barry Sternlicht 0.

Even after Sternlicht’s Starwood Capital Group upped its all-cash offer to acquire industrial giant Monmouth Real Estate Investment Corporation a third time last week, Monmouth decided to stick with Zell’s Equity Commonwealth (EQC) offer.

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Monmouth announced on Monday night that, after “carefully” considering Starwood (STWD)’s latest offer, its board decided to remain with its original plan to be acquired by EQC.

“Our board carefully considered the revised proposal from Starwood and determined that the amended merger with EQC remains the best path forward to maximize value for shareholders,” Brian Haimm, the lead independent director of Monmouth, said in a statement. “As such, we are once again unanimously reaffirming our support of the EQC transaction, and recommending that stockholders vote ‘for’ the EQC transaction.”

The monthslong saga over Monmouth’s new owner started in May, when EQC agreed to pay $3.4 billion in an all-stock deal for the company, giving Zell a huge footprint in the red-hot industrial market. 

Starwood came in the next month with an anonymous, unsolicited cash offer of $18.70 per share for Monmouth, which it later raised to $18.88. However, Monmouth rejected the bid, in what Starwood called a “highly disappointing” move.

But Sternlicht wasn’t the only person against EQC’s offer. Even though EQC slightly upped its bid, Institutional Shareholder Services (ISS) issued a report urging against the merger, saying that “there remains substantial uncertainty that the combined company will be able to execute on the post-transaction opportunities touted by [Monmouth’s] board.”

And last week, Monmouth investor Blackwells Capital — which also tried to acquire Monmouth earlier this year — announced its opposition to the EQC acquisition, arguing it “significantly undervalues” Monmouth and that EQC lacks an “industrial track record.”

Starwood then upped its bid to $19.93 per share, which, after Monmouth covered EQC’s $72 million breakup fee, would give Monmouth shareholders $19.20 per share.

But, even after the second defeat and three unrequited bids, Starwood said it was still ready to sign a deal to acquire Monmouth.

“The Monmouth board’s latest decision to not engage in discussions with Starwood is yet another action that deprives its own shareholders of receiving the higher and more certain value represented by our cash offer,” a Starwood spokesperson said in a statement. “The ISS recommendation against the transaction and continued shareholder opposition provides clear direction to the board that the EQC transaction is highly unlikely to gain the required supermajority approval and proceeding with a vote is not in the best interest of shareholders. Starwood stands ready to work with the Monmouth Board, sign the already-negotiated merger agreement it provided to Monmouth, and proceed quickly to finalize our proposed transaction.”

Monmouth’s shareholders will vote on the proposed EQC merger on Aug. 31 and it would need two-thirds of the vote for approval.

Nicholas Rizzi can be reached at