Reckson Associates Realty Corp. shareholders approved a $4 billion takeover by SL Green Realty Corp., but billionaire and rival bidder Carl Icahn hinted he would not abandon his fight for certain Reckson office buildings.
Thursday's vote followed two days of haggling, inconclusive ballot counting, as well as last-minute maneuvering by Icahn and Manhattan developer and office owner Harry Macklowe.
Major Reckson shareholder Cohen & Steers only decided to back the deal publicly, reversing its previous position, after Reckson Chief Executive Scott Rechler proposed a 29-cent-per-share special dividend, Rechler said.
Rechler will fund the dividend with severance he was due to receive after the deal closed, which totals about $25 million.
"Plus about 25 years of my life," joked Rechler, who at the end of the grueling two-day process immediately hugged his father, Roger, whose own father founded the company.
"We thought this was the right thing to do for the Reckson shareholders, sort of as the finale to show management's commitment to maximizing value," he added.
SL Green will pay $31.68 cash plus about a tenth of an SL Green share for each Reckson share. Based on SL Green's $134.24 close on Thursday, that is worth $45.62 a share or about $3.97 billion, plus the assumption of $2 billion of Reckson debt.
For SL Green, one of the largest owners of midtown Manhattan office buildings, the deal will add higher-quality skyscrapers to its portfolio and underscores the voracious appetite that investors have for New York office space.
The sale also includes a deal where a group led by Rechler and Marathon Asset Management would subsequently acquire suburban New York properties from Green for $2.1 billion.
Icahn said he made a last-minute bid for some of the suburban properties -- office buildings in Westchester County -- for $125 million more than the Rechler-led group offered.
But Reckson said it could not consider it, saying the SL Green agreement only allowed it to consider offers superior to the entire deal.
In response, Icahn said in an interview he had "reminded Rechler of his fiduciary responsibility" to his shareholders.
Macklowe, having dropped out of Icahn's bidding group, had been considering bidding for certain Reckson properties in New York City as soon as this week, a Macklowe spokesman said.
A person close to the matter said Macklowe decided not to bid because of the special dividend announcement.
Icahn, joined by Macklowe and real estate investment trust Mack-Cali Realty Trust, last month proposed a counter offer for Reckson of $49 per share in all cash. But that offer soon unraveled as Macklowe and Mack-Cali backed out.
Icahn offered to go it alone with a $49-per-share offer, comprised of some cash and mostly a new class of preferred units of Icahn's American Real Estate Partners LP.
Reckson declined to consider the offer, and on Wednesday, Icahn said he would end his bid for the company.
Rechler said difficulties in locating the shareholders who owned shares within the period defined under the merger agreement contributed to the drawn-out two-day vote.
As part of the sale, Rechler agreed to divest himself from his family's Rechler Equity Partners, which owns primarily industrial property in Long Island, outside New York.
Reckson shares lost 5 cents to $45.65 on the New York Stock Exchange. SL Green gained $1.67 or 1.3 percent.