Brookfield's Forest City takeover wins Glass Lewis support
Brookfield Asset Management Inc.’s $6.9 billion (U.S.) takeover of Forest City Realty Trust Inc. has garnered the support of a prominent shareholder advisory firm that argues the price provides an attractive premium for investors.
Glass Lewis & Co. urged Forest City investors to vote in favour of the transaction, which has been opposed by the company’s former chief executive officer and co-chairman emeritus, Albert Ratner.
“Overall, we find that the proposed transaction offers Forest City shareholders a financially compelling exit point, including an attractive premium to the unaffected trading price of Forest City shares and a reasonable valuation relative to REIT peers,” Glass Lewis said in its report Monday.
Brookfield agreed in July to buy Forest City for $25.35 a share, about an 11 per cent premium over the company’s closing share price the previous day.
Ratner, who owns less than 1 per cent of Forest City’s shares, plans to oppose the transaction partly because the price comes at a discount to the estimated net asset value of the company and because only seven of its 12 directors supported the sale. Glass Lewis said it shared some of those concerns but concluded the company had run an exhaustive sales process and had limited alternatives to unlock the underlying value in the near term.
“The proposed transaction is favourable relative to the risks and uncertainties associated with the stand-alone alternative,” according to the report. “Based on the forgoing factors and the support of a majority of the board, we believe the proposed transaction is, on balance, reasonable and in the best interests of shareholders.”