(Reuters) - Hudson Pacific Properties Inc (HPP.N) will buy a portfolio of office buildings in California from Blackstone Group LP (BX.N) in a $3.5 billion stock-and-cash deal that is larger than Hudson’s market value.
The deal will more than double Hudson’s portfolio to 53 properties totaling 14.6 million square feet across northern and southern California and the Pacific Northwest.
Hudson, a real estate investment trust focused on office properties, said it would pay $1.75 billion in cash and issue about 63.5 million shares and operating partnership units to Blackstone.
The stock portion of the deal is valued at $1.79 billion, based on Hudson’s Friday close. The company had a market value of about $1.9 billion as of Friday.
After the transaction closes, Blackstone funds will own about 48 percent of Hudson’s common equity on a fully diluted basis, the company said.
The transaction, expected to close in the first half of next year, will immediately add to Hudson’s normalized funds from operations.
The Eastdil Secured group of Wells Fargo Securities LLC was Hudson’s lead financial adviser, while Latham & Watkins LLP and Gibson, Dunn & Crutcher LLP were its legal advisers.
Goldman, Sachs & Co was Blackstone’s financial adviser and Simpson Thacher & Bartlett LLP and Pircher, Nichols & Meeks were its legal advisers.
Hudson’s shares were down 1.7 percent at $27.70 in premarket trading on Monday.
Up to Friday’s close, the stock had risen nearly 50 percent from its 52-week low of $19.13 touched on Jan. 29.
Reporting by Sagarika Jaisinghani in Bengaluru; Editing by Kirti Pandey