Brookfield Property Offers To Acquire Brookfield Office For $5B

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Brookfield Property Partners LP (NYSE:BPY) (TSE:BPY.UN), a subsidiary of Brookfield Asset Management Inc. (NYSE:BAM) (TSE:BAM.A), a Canadian investment management firm offered to acquire the 49 percent stake it does not yet own in its sister company, Brookfield Office Properties Inc  (NYSE:BPO) (TSE:BPO) for $5 billion, or $19.34 a share in cash and stock, according to Reuters.

Brookfield Property Offers To Acquire Brookfield Office For $5B

Brookfield Property acquisition price

The acquisition price proposed by Brookfield Property Partners LP (NYSE:BPY) (TSE:BPY.UN) represents a 15.3 percent over the closing price of the stock of Brookfield Office Properties Inc  (NYSE:BPO) (TSE:BPO) at $16.77 a share on Friday. The stock is trading around $19 per share, up by more than 13 percent around 2:47 in the afternoon in New York.

The proposal would combine the $45 billion real estate assets of the two subsidiary companies of Brookfield Asset Management Inc. (NYSE:BAM) (TSE:BAM.A).

Brookfield Office Properties Inc  (NYSE:BPO) (TSE:BPO) owns the former World Financial Center in New York and the First Canadian Place in Toronto.

Brookfield Asset Management spin off

Earlier this year, Brookfield Asset Management Inc. (NYSE:BAM) (TSE:BAM.A) spun off Brookfield Property Partners LP (NYSE:BPY) (TSE:BPY.UN) to manage its commercial real estate assets including its 51 percent stake in Brookfield Office Properties Inc  (NYSE:BPO) (TSE:BPO).

Brookfield Properties CEO, Ric Clark said, “We believe this transaction will consolidate our global office properties under one platform and substantially increase Brookfield property Partners’ public float which should help accelerate our growth strategy.”

Brookfield’s option for partnership

Brookfield Property Partners said the shareholders of Brookfield have the option to receive one limited partnership unit of its stock or $19.34 in cash with the total cash component of the deal, which will not be more than $1.7 billion.

The shares of Brookfield Property Partners LP (NYSE:BPY) (TSE:BPY.UN) are trading around $19.40 per share, slightly up on Friday afternoon in New York. According to the company, it would fund the cash portion of transaction by obtaining credit facility from several banks.

In a statement, Brookfield Office Properties Inc  (NYSE:BPO) (TSE:BPO) said a special committee was formed to evaluate the proposal of Brookfield Property Partners LP (NYSE:BPY) (TSE:BPY.UN).

Earlier in September, Brookfield Asset Management Inc. (NYSE:BAM) (TSE:BAM.A) said it is seeking discounted assets for investments in Europe. The company believed that the region is now an attractive market.

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