Vornado Realty Trust said in a statement issued late Sunday that it will pay the full cash portion of its $41 billion offer for Equity Office Properties Trust upfront and with certainty. The company says that, if accepted by EOP, that it will commence a tender offer to buy up to 55% of EOP's shares for $56 per share in cash, and will complete a follow-on merger.the EOP board said it prefers Blackstone's bids because they are all-cash. Monday, the board reaffirmed its commitment to Blackstone, and said the new $55.50 per share offer is better, and less risky, than Vornado's deal. Vornado's tender offer would be for a minimum of 51% of EOP's shares and would not be conditioned on a shareholder vote, as opposed to its most recent offer. According to the Sunday statement, if the tender is oversubscribed, shares would be prorated and unpurchased shares would receive Vornado shares valued at $56 per EOP share in the merger. However, if less than 51% of the shares are tendered, all of the EOP shareholders could receive $56 in cash and Vornado common shares.

Vornado had said earlier that it will fund the acquisition by issuing $10.6 billion in value of its shares and units and the balance with debt. The company said that it is in discussions to sell up to $10 billion of EOP's assets at closing to Starwood Capital and Walton Street Capital, and to sell an additional $10 billion of assets within the first year after closing. The company also said it expects to sell or co-venture other selected assets of the portfolio. EOP has a total office portfolio consisting of whole or partial interests in 580 buildings comprising 108.6 million sf in 16 states and the District of Columbia.

The EOP board said Monday that it prefers to stick with the Blackstone offer. "The alternative transaction proposed in the Vornado letter would still subject Equity Office to market and event risks over the four to six months that would be required to close the entire transaction, as well as the risks of the Vornado shareholder vote and the Vornado Board's 'fiduciary out' from its covenant to recommend the transaction," said the EOP board in a statement Monday. A Vornado spokeswoman could not be reached for comment.