Starwood Property Trust put another company on the map this week – Crexus Investment Corporation – by making an unsolicited bid to purchase the entire company at a 20% premium to their current stock price. What did Crexus' board decide to do? Reject it.

Why would they do that?

What company would not want to join up with a highly reputable competitor, plus put some money in their pocket? Have better opportunities due to the association, more money to do transactions with and just go to the next level of the business?

Starwood Property Trust was presenting an unconditional offer for the entire company as long as they did not go through with the share dilution they were about to price the next day. In fact, Starwood was even willing to go through with the pending purchase of mortgage assets from Barclay Capital Real Estate as long as they had 5 days to review the documents. So now Crexus stockholders are burdened with a share price that is lower than it was on Monday.

Honestly, I wouldn't be surprised if the Barclay Capital Real Estate portfolio was also being pursued by Starwood Property Trust, who lost out on it to Crexus. Starwood then thought it may make sense to just purchase the acquirer, and then along with Crexus' assets, they'll get the Barclay assets as well. How else would Starwood be able to do due dilligance on the Barclay porfolio – $528 million dollars worth – in as little as 5 days if they were not already pretty familiar with it?

Whenever takeover attempts fail, the company being taken over always has a rough road ahead of it – it has to perform a little better than it ever did before or else investors and partners will sit back and think – "They really should have sold to such and such" and end up being a much smaller and less powerful company. I hope for Crexus' sake that doesn't happen, their stock offering is successful and the Barclays transaction goes through without a hitch – or else Starwood (or another company) may take another stab at Crexus and win, but this time on the cheap.

What do you think? Should Crexus have taken the buyout offer? Will they be able to pull off everything? Let me know your thoughts in the comments or via email.

andrew@alconic-inc.com

Andrew Calvo is a Commercial Real Estate Advisor in New Jersey. I live in Tinton Falls, NJ. This blog is about my passions - |primarily hotels, commercial real estate, and development, etc.

Since I have been in High School I've had numerous jobs, but the field which has always interested me is Real Estate, Hotel Development and Construction. I consider myself a zealot in that area - I try to absorb as much as I possibly can, take the experiences that I learn, or read about and use them in my life. 

www.passionsofazealot.com