Brookfield Asset Management Inc. (“Brookfield”) (NYSE: BAM; TSX:
BAM.A) and Brookfield Property Partners L.P. (“BPY”) (NASDAQ: BPY;
TSX: BPY.UN) announced today that they have reached agreement for
Brookfield to acquire all of the limited partnership units of BPY
(“BPY units”) at a value of $18.17 per BPY unit1 (the “Enhanced
Offer”), to be completed by way of an Ontario court-approved plan
of arrangement (“Arrangement”). This represents total consideration
of $6.5 billion payable to the unitholders of BPY other than
Brookfield and its affiliates (“public unitholders”). The Enhanced
Offer represents an increase of 10%, including the appreciation in
Brookfield Class A Shares, over the non-binding proposal made by
Brookfield on January 4, 2021, a 26% premium to the undisturbed BPY
unit price on December 31, 2020, and a 6% premium to the
volume-weighted average price of BPY units on the Nasdaq since the
announcement made January 4, 2021.
The independent members of the BPY Board of
Directors (“the Directors”) have unanimously approved the
transaction and recommend that unitholders of BPY do the
same. After consultation with independent financial and legal
advisors, and upon the unanimous recommendation of a special
committee of independent directors, the Directors have concluded
that the offer is fair to the public unitholders and that the
transactions contemplated in the Arrangement are in the best
interests of BPY.
Nick Goodman, CFO of Brookfield Asset
Management, stated, “We are pleased to have reached agreement with
BPY’s independent directors on a transaction we believe is
appealing to BPY unitholders in many aspects and allows for greater
optionality in how we manage our portfolio of high-quality real
estate assets. Not only can unitholders choose to receive a
meaningful portion of their consideration in cash at a significant
premium, but they will also have the option to remain invested in
the future upside of our real estate business and alternative asset
management franchise.”
Lazard Frères & Co. LLC (“Lazard”), acting
as independent valuator and financial adviser to the special
committee, has provided an opinion to the special committee that,
as of March 31, 2021 and based upon their analysis and subject to
various assumptions, qualifications and limitations to be set forth
in its written valuation report, in addition to other factors that
it considered relevant, the fair market value of a BPY unit was in
the range of $14.00 to $18.50, implying a total enterprise value of
$67.6 to $72.1 billion. Lazard has also provided an opinion to the
special committee that, as of March 31, 2021 and based upon their
analysis and subject to various assumptions, qualifications and
limitations to be set forth in its written fairness opinion letter,
in addition to other factors that it considered relevant, the
consideration being offered to public unitholders under the
Arrangement was fair, from a financial point of view, to such
public unitholders. Copies of the Lazard valuation report and
fairness opinion, and the factors considered by the special
committee and the Directors as well as other relevant background
information will be included in the management information circular
that will be sent to BPY unitholders in advance of the special
meeting to be called to consider the Arrangement and related
transactions, which BPY unitholders are encouraged to review.
Transaction Details
Subject to pro-ration, BPY unitholders will have
the ability to elect to receive, per BPY unit, $18.17 in cash,
0.3979 of a Brookfield class A limited voting share (“Brookfield
Shares”), or 0.7268 of a BPY preferred unit with a liquidation
preference of $25.00 per unit. Pro-ration will be based on a
maximum cash consideration of approximately 50% of the total value
of the BPY units ($3.27 billion in total cash payable to public
unitholders), a maximum amount of Brookfield Shares equal to
approximately 42% of the total value of the BPY units (59.3 million
Brookfield Shares payable to public unitholders), and a maximum
amount of BPY preferred units with a liquidation value of
approximately 8% of the total value of the BPY units ($500 million
in liquidation preference of BPY preferred units payable to public
unitholders).
If public unitholders collectively elect to
receive in excess of $500 million in liquidation preference of BPY
preferred units, the amount of BPY preferred units can increase to
a maximum of $1.0 billion in liquidation preference, offset against
the maximum amount of Brookfield Shares. The maximum amount of cash
consideration would not be affected.
Implications for Brookfield Property REIT
Inc.
Any holders of the Class A stock of Brookfield
Property REIT Inc. (“BPYU”) (NASDAQ: BPYU) that do not exchange
their shares of BPYU Class A stock for BPY units prior to the
election deadline will receive at closing, in accordance with the
terms of the BPYU charter, the same per share consideration as will
be received by BPY unitholders who have not made an election, being
a combination of approximately 50% cash, 42% Brookfield shares and
8% BPY preferred units (subject to pro-ration). The aggregate
consideration of $6.5 billion payable to BPY unitholders in the
transaction includes the amount payable to the public holders of
shares of BPYU Class A stock and the transaction will not be
subject to a vote of holders of shares of BPYU Class A stock.
Any holders of shares of BPYU Class A stock who
wish to elect their preferred form of consideration rather than the
default pro-rated amounts, and/or vote in favor of or against the
Arrangement and related transactions, are encouraged to convert
their shares of BPYU Class A stock into BPY units as soon as
possible. Instructions on how to do so can be found here.
Following approval of the Arrangement and
related transactions by unitholders of BPY, it is expected that the
BPYU 6.375% Series A Cumulative Redeemable Preferred stock (NASDAQ:
BPYUP) will be redeemed at its par value of $25.00 per share, plus
any accrued and unpaid dividends, at or around the closing of the
Arrangement.
Implications for Brookfield Office Property
Exchange LP
The holders of exchangeable limited partnership
units of Brookfield Office Property Exchange LP will also be
entitled to make the same elections that can be made by BPY
unitholders in the transaction. Any holder who does not make an
election to participate will have his or her units redeemed prior
to closing and will receive the same default consideration as BPY
unitholders.
Brookfield is not proposing to acquire other
securities of BPY and its subsidiaries, which are expected to
remain outstanding.
Process and Related Matters
The Arrangement and related transactions are
subject to approval by a majority of the public unitholders of BPY,
in addition to other customary closing conditions including the
approval of the Ontario Superior Court of Justice.
Assuming these conditions are met, the Arrangement is expected to
close in the third quarter of 2021.
Pursuant to the terms of the agreement governing
the Arrangement, BPY unitholders and holders of shares of BPYU
Class A stock and exchangeable limited partnership units of
Brookfield Office Property Exchange LP will not receive further
quarterly distributions on their securities.
Torys LLP and Goodwin Procter LLP are serving as
legal counsel to Brookfield.
Lazard is serving as financial advisor and
Goodmans LLP and Latham & Watkins, LLP are serving as legal
counsel to BPY’s special committee.
IMPORTANT ADDITIONAL INFORMATION AND
WHERE TO FIND IT
This communication is being made in respect of
the proposed transaction between BPY and Brookfield. In connection
with the proposed transaction, Brookfield and BPY, together with
certain subsidiaries of BPY (collectively with Brookfield and BPY,
the “Registrants”) will file with the U.S. Securities and Exchange
Commission (the “SEC”) a registration statement on Form F-4 that
will include the circular of BPY and a prospectus of the
Registrants, as well as other relevant documents regarding the
proposed transaction. A definitive circular/prospectus will also be
sent to BPY unitholders.
This communication does not constitute an offer
to sell or the solicitation of an offer to buy any securities or a
solicitation of any vote or approval, nor shall there be any sale
of securities in any jurisdiction in which such offer, solicitation
or sale would be unlawful prior to registration or qualification
under the securities laws of such jurisdiction. INVESTORS ARE
URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC (IF AND
WHEN THEY BECOME AVAILABLE), INCLUDING THE CIRCULAR /PROSPECTUS AND
ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.
A free copy of the circular/prospectus, as well
as other filings containing information about the Registrants, may
be obtained at the SEC’s Internet site (http://www.sec.gov). You
will also be able to obtain these documents, free of charge, from
BPY by accessing BPY’s website at bpy.brookfield.com or from
Brookfield by accessing Brookfield’s website at
bam.brookfield.com. Such documents are not currently
available.
Brookfield Asset Management
Inc. is a leading global alternative asset manager with
US$600 billion of assets under management across real estate,
infrastructure, renewable power, private equity and credit.
Brookfield owns and operates long-life assets and businesses, many
of which form the backbone of the global economy. Utilizing its
global reach, access to large-scale capital and operational
expertise, Brookfield offers a range of alternative investment
products to investors around the world—including public and private
pension plans, endowments and foundations, sovereign wealth funds,
financial institutions, insurance companies and private wealth
investors. Brookfield Asset Management is listed on the New York
and Toronto stock exchanges under the symbol BAM and BAM.A
respectively.
For more information, please visit our website at
www.brookfield.com or contact:
Communications & Media (Brookfield):Claire
HollandTel: (416) 369-8236Email: claire.holland@brookfield.com |
|
Investor Relations (Brookfield):Linda Northwood
Tel: (416) 359-8647 Email: linda.northwood@brookfield.com |
Communications & Media (BPY):Kerrie McHughTel:
(212) 618-3469Email: kerrie.mchugh@brookfield.com |
|
Investor Relations (BPY):Matt Cherry Tel: (212)
417-7488 Email: matthew.cherry@brookfield.com |
Forward-Looking Statements
Note: This news release contains
“forward-looking information” and “forward-looking statements”
within the meaning of applicable Canadian
and U.S. securities laws. The word “will” and derivations
thereof and other expressions that are predictions of or indicate
future events, trends or prospects and which do not relate to
historical matters identify forward-looking statements.
Forward-looking statements in this news release
include statements with respect to the proposal described in this
new release, the expected benefits thereof, and the prospect of its
completion. Although Brookfield and BPY believe that such
forward-looking statements and information are based upon
reasonable assumptions and expectations, the reader should not
place undue reliance on forward-looking statements and information
as such statements and information involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of Brookfield and/or BPY to
differ materially from anticipated future results, performance or
achievement expressed or implied by such forward-looking statements
and information.
Factors that could cause actual results to
differ materially from those contemplated or implied by
forward-looking statements include: economic and financial
conditions in the countries in which we do business or may do
business; the behavior of financial markets, including fluctuations
in interest and exchange rates; availability of equity and debt
financing; and other risks and factors as detailed from time to
time in Brookfield’s Annual Report on Form 40-F and BPY’s Annual
Report on Form 20-F filed with the Securities and Exchange
Commission as well as other documents filed
by Brookfield and BPY with the securities regulators
in Canada and the United States.
We caution that the foregoing list of important
factors that may affect future results is not exhaustive. When
relying on our forward-looking statements to make decisions with
respect to Brookfield and BPY, investors and others should
carefully consider the foregoing factors and other uncertainties
and potential events. Except as required by
law, Brookfield and BPY undertake no obligation to
publicly update or revise any forward-looking statements or
information, whether written or oral, that may be as a result of
new information, future events or otherwise.
1 Reflects the value of a Brookfield Class A share as of market
close on March 26, 2021.
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