399 Park Ave., headquarters of both NorthStar companies, which will merge with Colony Capital.
NEW YORK CITY and LOS ANGELES—The would-be merger partners in what will be called Colony Northstar Inc. said Monday they had amended their agreement to incorporate changes to the governance structure. The move by NorthStar Asset Management Group Inc., Colony Capital Inc. and NorthStar Realty Finance Corp. follows calls for changes by activist investor Jonathan Litt, who has threatened to vote against the tripartite merger.
As part of the amended agreement, the new REIT's board will be reduced from the 13 directors originally proposed to 10. It will include two new independent directors, Jon A. Fosheim and Douglas Crocker II, among five jointly selected by NSAM and NRF. Colony Capital will also select five directors.
The board will stand for election on annual basis under the amended agreement. The merged entity will opt out of all of the provisions of the Maryland Unsolicited Takeover Act that would have permitted Colony NorthStar's board to adopt, without stockholder approval, a classified board structure and other anti-takeover provisions. And David Hamamoto, executive chairman of NSAM, has agreed to step down from the Colony NorthStar board if his equity investment falls below 50% of his equity interest as of the closing of the transaction.
All of these changes were advocated by Litt, founder and CIO of Land and Buildings Investment Management LLC, which controls approximately 2% of NSAM stock. In his view, for example, a 13-member board could be “unwieldy and expensive.” Litt made his concerns known in a Sept. 14 letter to shareholders in NSAM, which he believes would be substantially undervalued in the planned merger.
The management of NSAM, CLNY and NRF plan to hold their respective shareholder meetings prior to the end of the year and close the merger this coming January. In connection with the merger, NSAM is being advised by Goldman Sachs and is receiving legal counsel from Sullivan & Cromwell LLP, compensation and benefits counsel from Goodwin Procter LLP and tax counsel from Skadden, Arps, Slate, Meagher & Flom LLP and Hunton & Williams LLP. NSAM's special committee is being advised by Evercore and is receiving legal counsel from Fried, Frank, Harris, Shriver & Jacobson LLP and Morris, Nichols, Arsht & Tunnell LLP.
BofA Merrill Lynch is acting as lead financial advisor to Colony, while Barclays, Credit Suisse, Deutsche Bank, JP Morgan and Morgan Stanley are also acting as financial advisors in connection with the transaction. Willkie Farr & Gallagher LLP is acting as legal counsel to Colony, and Hogan Lovells LLP is acting as tax and Maryland counsel to Colony. Vinson & Elkins LLP is acting as legal and tax counsel to NRF. UBS Investment Bank is acting as exclusive financial advisor and Venable LLP is acting as legal counsel to NRF's special committee.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
