- Brookfield Property Partners (TSX:BPY.UN) is set to buy and cancel around 74 million share units in an issuer bid released today
- The company will purchase the shares at approximately C$16.30 per share, for a total cost of $1.2 billion
- The company will fund this through an equity arrangement with Brookfield Asset Management
- Under the terms of the agreement, BPY can borrow up to $1.36 billion to cancel the shares, in exchange for an equity commitment to BAM
- Brookfield Property Partners (TSX:BPY.UN) is up 15 per cent and is trading at $15.48 per share
Brookfield Property Partners (TSX:BPY.UN) will purchase just over 74 million shares from public unit holders for a price of approximately C$16.30 per share.
This represents a 17 per cent premium on the company’s Nasdaq price at July 1 and the news has bumped the company's shares up 15 per cent.
The offer will be funded by Brookfield Asset Management (BAM), in exchange for a larger equity slice in BPY. The company can draw down up to approximately $1.36 billion from BAM, funded from a mix of cash on hand and from managed accounts on behalf of BAM clients.
The equity commitment can be exercised by BAM at any time this year, with a hard deadline of December 31. The company has estimated the total value of the bid at approximately $1.2 billion.
In exchange, BPY will offer up units, redeemable partnership units, or units in the company's subsidiary Brookfield Property L.P at a price equal to the price paid.
As yet, there is no word from BPY on what exact form of compensation it will offer BAM for the funding. BAM already owns 55 per cent of the outstanding units of BPY.
Brian Kingston, the CEO of Brookfield Property said the offer will provide unit holders who desire liquidity an opportunity to sell their stock at a premium to the market price.
"BAM is providing support for the offer by agreeing to fund the bid in exchange for an additional equity interest in our business," he said.
Brookfield Property Partners (TSX:BPY.UN) is up 15.48 per cent share and is trading at $15.48 per share at 3:00 pm EDT.