Brookfield Asset Management To Buy Associated Estates Realty In $2.5 Bln Deal

(RTTNews) - Associated Estates Realty Corp. (AEC), a real estate investment trust, said Wednesday that it has agreed to be acquired by an affiliate of Canadian property owner Brookfield Asset Management Inc. (BAM, BAM_A.TO) in a deal valued at about $2.5 billion, including the assumption of debt.

Under the terms of the definitive merger deal, a real estate fund managed by Brookfield Asset Management will acquire all the outstanding shares of Associated Estates' common stock for $28.75 per share in cash. The merger price represents a 17.4 percent premium to Associated Estates' closing stock price of $24.48 on Tuesday.

Toronto, Ontario-based Brookfield Asset Management is a publicly-owned alternative asset manager focused on property, renewable power and infrastructure assets. The company has about $200 billion in assets under management.

The transaction has been approved by Associated Estates' board of directors. Associated Estates said it will convene a special meeting to seek the approval of its shareholders for the merger and added that the annual meeting previously scheduled for May 22, 2015 has been postponed indefinitely.

The transaction is not contingent on receipt of financing by Brookfield. The closing of the transaction is expected to occur in the second half of 2015. Following the closing, Associated Estates' headquarters will remain in Richmond Heights, Ohio.

Jeffrey Friedman, Chairman and CEO of Associated Estates, said, "In December 2014, we announced that our Board was undertaking a thorough business review with the assistance of our financial advisor. After analyzing the Company's strategy, assets and other opportunities, including running a process involving a number of qualified potential buyers, the Board unanimously determined that this transaction is the best course of action to maximize shareholder value."

Associated Estates said it will release financial results for its first quarter 2015 on Friday, May 1, 2015. However, due to today's announcement, the company will not hold a conference call to discuss its first- quarter financial results.

Associated Estates intends to pay its previously announced common stock dividend of $0.21 per share on May 1, 2015 to shareholders of record as of April 15, 2015. The company does not expect to pay additional dividends prior to the closing of the merger.

Associated Estates had come under activist pressure in recent months. Jonathan Litt's Land & Buildings Investment Management had criticized Associated Estates' share performance and urged the company to find a buyer.

Land and Buildings had nominated three candidates for election to Associated Estates' board and had urged Associated Estates' shareholders to vote for its nominees at the annual meeting of shareholders in May. Land and Buildings, collectively with Scot Sellers, are shareholders of about 2.8 percent of the common shares of Associated Estates Realty.

AEC is trading at $28.45, up $3.98 or 16.24 percent on a volume of 6.48 million shares.

BAM is trading at $55.53, up $0.08 or 0.14 percent on a volume of 574,735 shares.