There’ll be no IPO for apartment owner Archstone. The company instead has decided to agree to a $6.5 billion buyout. Among the suitors are Equity Residential (NYSE:EQR) and AvalonBay Communities (NYSE:AVB). The transaction includes $2.7 billion in cash as well as $3.8 billion in stock.
Back in 2007, Lehman Brothers took Archstone private in a $22 billion transaction. Unfortunately, it turned out to be a disaster as the real estate market quickly collapsed.
Despite this, Archstone was able to rebound, thanks to the apartment market growing at a nice clip. In the third quarter, Archstone’s rental revenue increased by about 8.3% to $272.7 million.
Still, business could slow down because the residential real estate market seems to be in turnaround mode. This is perhaps the reason that the estate of Lehman Brothers thought selling was the best option.
In the deal, Equity Residential will get 23,000 apartments, and AvalonBay will acquire 22,000 units.
Tom Taulli runs the InvestorPlace blog IPOPlaybook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook” and “High-Profit IPO Strategies: Finding Breakout IPOs for Investors and Traders.” Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.