Brookfield Affiliate has decided to buy the leading reality firm Associated Estates Realty Corporation (NYSE:AEC). As per the reports, the deal will cost as much as $1.66 billion to Brookfield Affiliate. The announcement was made by Associated Estates on Wednesday stating that it had agreed to sell itself to one of the affiliates of renowned property investor Brookfield Asset Management Inc. The company had come under a huge activist pressure lately, which is why it had to agree to this transaction.
Digging Into Deal:
It’s an all-cash deal, which is to cost around $1.66 billion to Brookfield. If the debt is included in the transaction, it will cost Brookfield around $2.5 billion. As per the reports, Associated Estates’ shareholders have been offered a price of $28.75 per share, which is equal to 17% premium to the closing price of company’s stock on Tuesday. As soon as the announcement was made public, the price of Associated Estates elevated by 16.4% and touched $28.50 mark in midday trading.
With the help of this deal, the apartment real-estate investment trust will be able to quell a proxy fight with Jonathan Litt, Fund Manager. Had this transaction didn’t take place, he would have joined as the head of Associated Estates during its annual meeting that is supposed to take place on May 22, 2015. Mr. Litt and his company Land & Buildings were looking forward to adding three of their directors to the board of REIT. Associated Estates has decided to postpone the meeting.
Litt initiated a campaign in November 2014 to replace the board of Associated Estates by calling all the board members inefficient and underperformers in the past one decade. Earlier he proposed the board of directors to sell the company, which couldn’t be executed. He was delighted after the announcement of this transaction was made.