By Saabira Chaudhuri
AvalonBay Communities Inc. (AVB) said its offering of 14.5
million shares priced at a 1.6% discount to Wednesday's close,
while Equity Residential (EQR) said its 19 million share offering
priced at a 0.8% discount.
Shares of Avalon fell $1.05 to $131 in recent premarket trading
but remained above the $130-a-share offer price. The stock has
risen 11% in the past year. Meanwhile, those of Equity edged down
18 cents to $55 but were above the $54.75 offer price. Equity's
stock has risen 4.3% in the past year
Earlier this week, Avalon and Equity Residential revealed they
plan to acquire Archstone Enterprise LP, a portfolio of apartment
properties, from Lehman Brothers Holdings Inc. for a total of
around $6.5 billion in cash and stock.
Under the terms of the deal, Equity Residential, the country's
largest apartment developer and manager, will acquire about 60% of
Archstone's assets and liabilities, while AvalonBay will acquire
roughly 40%. The deal is expected to close in the first quarter of
2013.
Avalon and Equity both said they will likely use the offering's
net proceeds to fund the cash part of the acquisition's price. If
the Archstone acquisition doesn't occur, the companies said they
intend to use the net proceeds from the offering for general
corporate purposes.
Avalon also said it could use the proceeds to pay down debt
associated with its pending acquisition of certain assets of
Archstone, or for costs, fees and expenses associated with the
deal.
Write to Saabira Chaudhuri at saabira.chaudhuri@dowjones.com
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