Reckson says no to Carl Icahn.

Reckson Associates shareholders are expected to accept a controversial $4 billion bid for the firm from SL Green at a special meeting being held in New York today (Wednesday) after the firm's board of directors rejected a rival offer from investor Carl Icahn's American Real Estate Partners.

In a statement issued Tuesday morning, Reckson said it would proceed with its shareholder meeting to consider the deal with SL Green Realty Corp after determining Icahn's bid raised too many financial and legal issues.

"Reckson's board, by a vote of its independent directors, determined that the proposal from American Real Estate Partners ... does not meet the standard set forth in the SL Green merger agreement to permit discussions or negotiations with AREP," the company said in an official statement.

The board cited the securities offered as part of the Icahn bid as its prime concern, saying they could not be certain of their true value.

"These securities could be valued at a substantial discount to par which would reduce the proposal's economic value," the statement concluded. Icahn had pressed ahead with his solo offer to buy Reckson following a u-turn by his partners on the deal over the weekend. Both Macklowe Properties and Mack-Cali backed out of the partnership in which they had pledged to invest $1 billion towards the acquisition. Icahn then came up with his own $4.3 billion offer funded with $1 billion in cash and $3.3 billion in preferred stocks of his American Real Estate Partners that he said matched the $49 per share bid he had originally made in partnership with Macklowe after Reckson had entered into an agreement to sell its portfolio of Manhattan and suburban commercial properties to SL Green in a cash and stock offer valued at roughly $4 billion.

Mack-Cali, which had passed on making an offer for Reckson when the company was originally shopping around its portfolio to potential suitors, had joined Icahn and Macklowe only last week mainly out of interest for Reckson's suburban properties, a statement from the company revealed.

"We believe that when invited into this deal, we owed it to our shareholders to consider the acquisition of Reckson due to synergies with Reckson's suburban markets," Mack-Cali's president and CEO Mitchell Hersh said in the statement. "However, after careful analysis, we determined that this transaction would not be in the best interests of our shareholders."

Further details weren't available on Tuesday on just why Mack-Cali and Macklowe had retracted their commitment, but the partnership had stated from the outset that its $49 per share offer would be contingent on a 10-day due diligence period. In written reports, SL Green executives dismissed the competing buyers based on that contingency, indicating that once the partnership took a deeper look at the finances of the deal, it would have to either lower or drop its bid.

Reckson's shares meanwhile continued to yo-yo and the turf battle was fought to the wire. After MackCali had jumped on board with Icahn and Macklowe, stock jumped to $49.88 per share, however, by Tuesday, it had dipped to $45.75, a clear sign of disappointment in the newest Ichan bid.

SL Green's offer, while it has since risen because SL Green shares have appreciated, drew controversy at the time for being one of the only deals in a yearlong flurry of large mergers and acquisitions in the REIT sector in which the sales price failed to match the company's share price. According to The Wall Street Journal, SL Green agreed to pay $43.31 a share for Reckson the day the deal was announced on August 3.64 cents less than what the company's stock was trading for the previous day.

The deal drew further scrutiny from shareholders after it was revealed that Scott Rechler, Reckson's chief executive, had arranged a side transaction with SL Green to privately buy back Reckson's suburban holdings.

It was also revealed in recent weeks that Macklowe Properties and Icahn own 5% of Reckson's stock.