Reckson shareholders may delay sale.

Reckson will likely delay a shareholder meeting this week that was set to vote on SL Green's $4 billion bid for the company. There has been wide speculation that voters would disapprove the sale after a partnership between billionaire financier, Carl Icahn, and Macklowe Properties emerged last week with a competing offer worth roughly $600 million more than the deal with SL Green.

Reckson stated last week that it would consider the new bid, a $49 per share offer that Icahn and Macklowe had said 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 revise its offer.

Reckson stock prices rose on the news however and were trading at around $48 per share by the end of last week, indication observers say that shareholders are anticipating a better deal and perhaps also that they won't settle for anything less.

A number of prominent stockholders have said that they would vote against the deal, including Arnhold & S. Bleichroeder Advisers LLC, which owns 1% of Reckson's stock.

Steven Schlesinger, a managing partner at Jaspan Schlesinger Hoffman, is representing another group of shareholders who have launched a suit to block the sale to SL Green as well as cancel a $100 million breakup fee written into SL Green's acquisition agreement with Reckson.

"That's a rich termination fee for a deal like this," Schlesinger said. "Normally a breakup fee is designed to compensate the bidder for the cost of due diligence, but I don't see how, when you're given a week for due diligence, someone can spend $100 million."

Reckson's deal with SL Green had come under fire well before the new offer emerged. Shareholders directed criticism particularly towards Reckson's chief executive Scott Rechler, who had arranged a private deal with SL Green to buy back Reckson's suburban portfolio. Opponents claimed that Rechler's side-deal created a conflict of interest in Reckson's transaction with SL Green, because it provided him with an incentive not to seek the highest price for the portfolio.

Indeed, amid a busy pace of M&A activity in the REIT industry, the deal was set to be one of the few in which a buyer's purchase price equated to less than the share price of the acquired company. According to the Wall Street Journal, which broke the story, Reckson's shares were valued at $43.31 a share the day the deal was announced on August 3--64 cents less than what they were trading for the previous day. As of yesterday, the offer was worth about 21 cents.

Icahn and Macklowe's offer translates into $49 per share.