The shares Rouse Properties surged after Brookfield Asset Management submitted an unsolicited offer to acquire the real estate investment trust (REIT) for approximately $657 million.
The stock price of Rouse Properties climbed 30% to $17.54 per share at the time of this writing around 10:52 in the morning in New York.
Brookfield Asset Management is the largest alternative asset manager in Canada. Last year, it acquired Associated Estates Realty Corp, an apartment landlord in the United States, for $2.5 billion as part of its efforts to boost its property holdings.
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Brookfield’s offer to Rouse Properties
Rouse Properties revealed that its Board of Directors received a written, unsolicited, and non-binding proposal from Brookfield Asset Management to acquire all of its common stock for $17 per share in cash. The proposal excluded the 33% stake currently held by Brookfield Properties and its affiliates.
Brookfield Asset Management indicated that its proposal is not subject to any financing contingencies, and any due diligence on the company.
The proposed acquisition price represents a 26% premium on the closing stock price of Rouse Properties on Friday.
Brian Kingston, CEO of Brookfield Property Partners, the publicly-traded real estate unit of the Canadian alternative asset manager, said, “Our offer provides an attractive opportunity for Rouse shareholders to realize a significant premium to recent public-market pricing.”
Rouse Properties created a special committee
The Board of Director of Rouse Properties established a special committee responsible for reviewing the acquisition proposal submitted by Brookfield Asset Management.
The special committee has the authority to accept, reject, or negotiate the terms of the offer. It has also power to explore and solicit other proposals as well as to evaluate and develop alternatives to the offer of the Canadian alternative asset manager.
Additionally, the special committee has the authority to take any corporate actions or enter into any agreements with Brookfield Asset Management and other entities, or adopt any measures in response to the proposal.
The members of the special committee include Christopher Haley, Michael Hegarty, David Kruth, Michael Mullen and Andrew Silberfein—all serving as directors of Rouse Properties’ Board.
The company emphasized that the special committee is committee to maximizing value for shareholders. The special committee hired Sidney Austin LLP as independent legal counsel and Bank of America Merrill Lynch as independent financial advisor to help in reviewing the proposal and any alternatives.
Rouse Properties and Brookfield Asset Management signed a standstill agreement on January 18 at the request of the special committee.