- Brookfield Property Partners (NASDAQ:BPY) jumps 16% in premarket trading after Brookfield Asset Management (NYSE:BAM) with institutional partners proposes to acquire all of BPY's limited partnership units that it doesn't already own at $16.50 per BPY unit, or $5.9B total value.
- BPY unitholders would have the ability to elect to receive $16.50 in cash, 0.40 Brookfield class A shares, or 0.66 of BPY preferred units with a liquidation preference of $25.00 per unit.
- "The privatization will allow us to have greater flexibility in operating the portfolio and realizing the intrinsic value of BPY’s high-quality assets," said BAM CFO Nick Goodman.
- Brookfield's offer includes a maximum cash consideration of $2.95B, a maximum of 59.5M BAM shares, and a maximum of $500M of BPY preferred units.
- If unitholders collectively elect to receive in excess of $500M BPY preferred units, the amount of BPY preferred units can increase to a maximum of $1.0B, offset against the maximum amount of Brookfield shares. The maximum amount of cash consideration would not be affected.
- The $16.50 per unit price represents a premium of 14.0% to BPY's closing price on Nasdaq on Dec. 31, 2020.
- Holders of Brookfield Property REIT class A stock will be entitled to receive the same per-share consideration as BPY unitholders under the proposal upon exchange of their shares into BPY units.
- It is also expected that the BPYU 6.375% series A cumulative redeemable preferred stock would be redeemed at its par value of $25.00 per share in connection with the proposed transaction.
- Trapping Value recently looked at BPY's "astronomical" leverage.