Brookfield Property Offers To Buy Rest Of Brookfield Office In $5 Bln Deal

(RTTNews) - Commercial real estate owner Brookfield Property Partners L.P. (BPY, BPY_UN.TO) has offered Monday to acquire the remaining 49 percent of Brookfield Office Properties, Inc. (BPO, BPO.TO) in a cash and stock deal valued at $19.34 per share or $5 billion. The offer is expected to be launched formally in the first quarter of 2014 and close in the first half of 2014.

Brookfield Property Partners or BPP, noted that the offer will now be taken to the Brookfield Office Properties or BPO, Board of Directors for a review process. BPO is then expected to appoint a committee of independent directors to commission an independent valuation and make a recommendation to BPO common shareholders regarding the offer.

The proposed combination will result in a combined entity that will be one of the largest global commercial real estate companies. BPP currently owns 51 percent of BPO and intends to increase the ownership to 100 percent.

The combined entity will have $45 billion of assets and ownership comprising over 330 million sq. ft. of office, retail, industrial and multi-family assets in key global gateway markets on four continents.

"The Offer provides an attractive opportunity for BPO shareholders to exchange their common shares for an interest in our flagship global property company and cash," BPP CEO Ric Clark said in a statement.

Clark believes that the proposed deal will consolidate the global office properties of the two companies under one platform and substantially increase Brookfield Property Partners' public float to $4 billion thus enabling acceleration to growth strategies.

The offer price of $19.34 represents a 15.3 percent premium over Brookfield Office's closing share price of $16.77 on Friday.

The deal will see each BPO shareholder electing to receive either 1.0 limited partnership unit of BPP or $19.34 in cash. This will be subject to a maximum of 174 million BPP limited partnership units and a maximum cash consideration of $1.7 billion.

Following a tender offer, BPP said it intends to acquire any common shares which remain outstanding following the tender offer through a compulsory acquisition or other statutory transaction on the same basis as the offer.

BPP added that the offer will not include a minimum condition with respect to the number of common shares tendered, and will acquire any or all of the common shares that are tendered to the offer.

BPP noted that it intends to finance the cash portion of the offer through an acquisition facility with a syndicate of banks.

Following the closure of the proposed deal, the common shareholders of BPO will realize an 18 percent increase in the IFRS book value per share on the units of BPP that they receive. BPO common shareholders will also realize a 79 percent increase in distributions per security on units of BPP that they receive.

In Monday's regular trading session, BPY is currently trading at $19.54, up $0.20 or 1.03% on a volume of 37,498 shares, and BPO is trading at $19.28, up $2.51 or 14.97% on a volume of 4.12 million shares.