Mack-Cali Reality Corp. and Prentiss Properties have announced that they have terminated their $976 million-in-stock agreement in which Mack would have acquired Prentiss. The decision to end the acquisition comes after a strategic review by Donaldson Lufkin & Jenrette, Inc.
The Prentiss buyout would have given Mack-Cali, which has a significant Northeastern base with 266 properties, a strong Southwestern presence. However, shareholders showed a decided reluctance to accept the plan.
Under the terms of the negotiated termination agreement, Prentiss Properties will acquire Mack-Cali's 270,000 sq.-ft. Cielo Center in Austin, TX, for $47.1 million. In connection with the transaction, Mack-Cali deposited $25 million into an escrow account for the benefit of Prentiss Properties.
Before the deal fell through, Prentiss Properties was planning to redirect its emphasis to office properties from industrial holdings. Recently, the Dallas-based company paid $63.3 million for an Oakland, CA, office and development site, action that closely follows a planned disposition of the REIT's final holdings in Houston and Dallas.
"While we still believe in the merits of the merger, the termination of the agreement at this point is in the best interests of both companies," says Thomas August, CEO of Prentiss Properties.
