The Lehman Brothers banking group will sell the development company Archstone Inc, which will soon conduct an IPO (initial public offering). The buyers will be two companies also operating in the US development market - Equity Residential and AvalonBay Communities. This is stated in a press release from AvalonBay.

The total amount of the transaction will be $6.5 billion. Of this, Lehman Brothers will receive 2.69 billion in cash, and the rest in the form of 34.5 million shares of Equity Residential and 14.9 million AvalonBay securities.

As a result, the investment bank will own 13.2 percent of AvalonBay and 9.8 percent of Equity Residential. In turn, Chicago-based Equity Residential will take 60 percent of Archstone Inc. and Arlington-based AvalonBay will take the remaining 40 percent. The buyers will also receive $9.5 billion of the company's debt, which will be distributed in proportion to the shares in the purchased asset.

According to The Washington Post, Lehman Brothers notes that the proceeds from the deal will be used to pay the bank's creditors. AvalonBay and Equity Residential say the acquisition will boost their revenues as the companies will be able to add Archstone Inc.'s extensive portfolio of projects to their portfolio.

It was previously reported that by the end of the year Archstone Inc will hold an IPO, during which it is planned to raise $3.45 billion. The offering is expected to be the third largest in the United States this year, behind the IPOs of the social network Facebook and the Mexican unit of Banco Santander. In addition, if successful, Archstone's IPO will be the largest in the history of American real estate companies. Analysts value the entire company at $16 billion.

Lehman Brothers acquired Archstone Inc for $15.5 billion in 2007, shortly before the US housing crisis began. Even before the stagnation, the development company had debts of $6.9 billion, and by 2008 it was on the verge of collapse. That same year, Lehman Brothers itself declared bankruptcy. Its collapse was the largest in US history and is believed to have triggered a financial crisis that spread from America to Europe and Asia. In March 2012, Lehman Brothers emerged from bankruptcy proceedings .

Lehman Brothers will divest its development assets