US based Lehman Brothers Holdings (LBHI) has agreed to sell complete ownership of its single largest asset, Archstone Enterprise, to Equity Residential (EQR) and AvalonBay Communities (AVB) for nearly $6.5bn in a cash and stock transaction.
As per the terms of agreement, 60% and 40% of Archstone’s assets and liabilities will be purchased by EQR and AVB respectively.
On completion of the deal, Lehman and its affiliate, Lehman Commercial Paper, will receive $2.7bn in cash and 34,468,085 and 14,889,706 shares of Equity and AvalonBay common stock, which is valued at $3.8bn.
LBHI and its affiliates will now own 9.8% of EQR and 13.2% of AVB based on the shares of each issued as consideration.
The deal is not subject to shareholder approval of the acquires and is expected to close within a time period of 120 days.
Lehman Brothers, which went bankrupt in 2008, has emerged from bankruptcy protection in March this year and is disposing of its assets to pay back $65bn to its creditors, as part of a wind-down plan approved by a bankruptcy court.
In the aforesaid deal, Gleacher & Co, Citigroup and JP Morgan Chase provided advice to Lehman, while Morgan Stanley served for Equity Residential and Greenhill & Co, for AvalonBay.