This is because bankrupt Lehman Brothers holds a 47% stake in Archstone and has a right of first refusal to purchase the ownership interest being sold at the same price.
The 26.5% stake represents 50% of B of A and Barclays' ownership of Archstone. If the right of first refusal is exercised by Lehman, according to a filing with the Securities and Exchange Commission, in lieu of a breakup fee, Equity Residential has the right to purchase the remaining shares in Archstone that B of A and Barclays owns.
A request for comment from Archstone was not returned by press time.
According to a Fitch Ratings report on the transaction, the deal gives Equity Residential approval rights on certain Archstone corporate governance provisions.
Those rights, Fitch said, "may ultimately serve as a catalyst for Equity Residential to acquire all of Archstone in the future, or may enable the company to acquire certain of Arcshstone's assets. As such, this transaction likely represents the first stage of a lengthier and more involved process with respect to Archstone."
Equity Residential plans to fund the deal through cash on hand, plus a draw of its $1.25 billion revolving credit facility, proceeds from the sale of non-core assets, bank term and secured and unsecured debt and equity offerings. Equity Residential has already obtained a $1 billion bridge loan from Morgan Stanley Senior Funding Inc.