LOS ANGELES-Those who follow @GlobeStcom on Twitter and @GlobeStLIVE may have seen a post teasing the announcement, but GlobeSt.com has learned that MPG Office Trust Inc. has entered into a definitive merger agreement pursuant to which a newly formed fund controlled by Brookfield Office Properties Inc. will acquire the company.
Under the terms of the merger agreement, the holders of MPG's common shares will receive $3.15 per share in cash at the closing of the merger. The per share price represents a 21% premium to MPG's closing share price of $2.60 on April 24, 2013. In connection with the merger agreement, Brookfield has entered into a guarantee with respect to obligations of its affiliates under the merger agreement, according to a prepared statement. The merger agreement and the transactions contemplated thereby have been unanimously approved by the company's board of directors.
The merger agreement also provides that a subsidiary of Brookfield will commence “a tender offer to purchase,” subject to the offer conditions, all of the company's outstanding preferred shares for $25.00 per share in cash, without interest, according to the statement.
Brookfield is expected to commence the tender offer in early May, and will distribute offering materials to the company's preferred stockholders which will describe the tender offer.
Any preferred shares that are not tendered, according to the statement, will be converted in the merger into new preferred shares with rights, terms and conditions substantially identical to the rights, terms and conditions of the outstanding preferred shares.
If more than 66.6% of the outstanding preferred shares are tendered, then Brookfield will have the right to convert all of the untendered preferred shares at the price in cash offered in the tender offer, without interest, but only if such conversion complies with applicable law and the company's charter in all respects at the time of conversion.
“Following a lengthy and exhaustive search, we have found a strategic buyer who has the capital and the market presence to appreciate the potential long-term value of our assets,” says David Weinstein, president and CEO of MPG. “This transaction potentially offers both our common and preferred shareholders a liquidity event that would remain uncertain if the Company were to continue on as an independent entity.”
The merger is expected to close in the third quarter of 2013. The completion of the merger transaction is subject to approval of the company's common stockholders, receipt of certain consents from the Company's lenders and other customary closing conditions.
The company will file a proxy statement on Schedule 14A with the SEC, which will describe the proposed acquisition. The Eastdil Secured group of Wells Fargo Securities LLC and BofA Merrill Lynch served as financial advisors to MPG, and Latham & Watkins LLP and Venable LLP served as legal advisors to MPG.
Fried, Frank, Harris, Shriver & Jacobson LLP and Goodwin Procter LLP served as legal advisors to Brookfield.
Back in November, as GlobeSt.com reported, we said that there was speculation that a move could be in the works and that MPG might sell its office portfolio. At the time, PG's president and CEO David Weinstein revealed during the firm's third-quarter earnings call that MPG had relieved itself of more than $700 million of debt during the quarter due to sales of key office properties including Glendale Center ($125 million of debt relieved), 500 Orange Tower ($110 million of debt relieved) and Two California Plaza ($470 million of debt relieved). The dispositions left MPG's former CEO Rob Maguire exposed to significant taxation. As GlobeSt.com reported in August, according to a statement put out by MPG in late June, the REIT “received notices of redemption from Robert F. Maguire III and related entities requesting the redemption of 3.97 million operating partnership units. On July 24, 2012, the company issued 3.97 million shares of the company's common stock in exchange for these units. At Maguire's request, the company issued the common stock to a party not related to Maguire.
GlobeSt.com will add more information as it becomes available. Also, be on the lookout for an update to the story from Brookfield's perspective.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
