Icahn Loses Partners in Bid
To Acquire Office REIT

The partnership formed by financier Carl Icahn in his effort to acquire Reckson Associates Realty Corp. unraveled over the weekend. But the real-estate investment trust said Mr. Icahn insists he is prepared to move forward alone with his bid.

Harry Macklowe, a New York real-estate developer, pulled out of the partnership with Mr. Icahn yesterday, a Reckson spokesman said. That followed the withdrawal of Mack-Cali Realty Corp., an Edison, N.J.-based REIT, from the partnership on Saturday.

But the spokesman said Mr. Icahn informed Reckson's independent board yesterday he is still considering making a proposal to acquire Reckson, but said the $49-per-share cash deal (equal to $4.6 billion) will likely change. He informed the board his bid might no longer be cash only and did not make clear what his price will be, the spokesman said.

Further details were unavailable. Mr. Icahn didn't return calls, and a spokesman for Mr. Macklowe declined to comment.

The Icahn partnership had previously announced it would provide its official bid today for Reckson, which already has agreed to a proposed acquisition by SL Green Realty Corp. It was unknown whether Mr. Icahn would still meet that goal.

Reckson disclosed the departure of Mack-Cali in a statement Saturday night. Mack-Cali's participation was always contingent on reaching a comfort level with the $49-per-share price after performing due diligence on Reckson's assets. Mack-Cali Chief Executive Mitchell Hersh, who had pushed to be added to the partnership and was officially allowed to join only Thursday, spent most of Friday and Saturday morning scouring Reckson's books, then exercised his option to withdraw. His withdrawal, after finishing his due diligence, raises the possibility he believed that the bids for the company are too high.

On Nov. 16, Messrs. Macklowe and Icahn told Reckson's independent directors their group would be willing to buy the company in an all-cash bid. Their bid topped the cash-and-stock offer Reckson accepted from SL Green, valued at $43.31 a share, or $4.1 billion plus $2 billion in debt assumption, when it was announced Aug. 3. Because SL Green's stock has climbed, its bid is now valued at about $45.70 a share. Reckson's shares declined 29 cents Friday to 48.09 each in 4 p.m. New York Stock Exchange trading.

The Reckson board was due to meet late last night to discuss the developments. In a statement issued Saturday, before Mr. Macklowe exited the picture, the Reckson directors expressed concern that they still didn't have the documentation of the partnership's debt-financing arrangement.

Reckson has scheduled a shareholder vote for Wednesday and reiterated that its independent directors recommend accepting the SL Green bid.

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