Brookfield to Acquire Majority Stake in Oaktree

March 18, 2019

On March 13, 2019, Brookfield Asset Management Inc. announced that it had entered into an agreement to acquire approximately 62% of Oaktree Capital Group, LLC.


Under the terms of the agreement, Brookfield Asset Management Inc. (“Brookfield”) will acquire all outstanding Class A units of Oaktree Capital Group, LLC (“Oaktree”) for either $49.00 in cash or 1.0770 Class A shares of Brookfield per unit, at the option of the Oaktree Class A unitholders, for a premium of 12.4% per unit based on the closing price of Brookfield shares and Oaktree units on March 12, 2019. Founders, senior management and current employee-unitholders of Oaktree Capital Group Holdings, L.P. (“OCGH”), which holds all of Oaktree’s Class B units, will sell 20% of their units to Brookfield for the same consideration as the Class A holders. Upon consummation of the transaction, Brookfield will hold approximately 62% of the outstanding units of Oaktree, with the remainder continuing to be held by the OCGH unitholders. The agreement also provides for a liquidity schedule pursuant to which former employee-unitholders, founders, senior management and current employee-unitholders will be able to sell their remaining units to Brookfield beginning in 2022. Pursuant to the liquidity schedule, Brookfield could own 100% of Oaktree as early as 2029.

Brookfield and Oaktree will continue to operate their respective businesses independently, led by their respective existing management and investment teams. Oaktree will continue to be led by Howard Marks as Co-Chairman, Bruce Karsh as Co-Chairman and Chief Investment Officer and Jay Wintrob as Chief Executive Officer. Marks will also join Brookfield’s board of directors.

The transaction is subject to approval by a majority of Oaktree unitholders, as well as customary regulatory approvals. The transaction also provides for a $225 million termination fee under certain specified circumstances. OCGH, representing approximately 92% of the outstanding voting interests of Oaktree, has agreed to vote all units in favor of the transaction. In addition, acting on the recommendation of a special committee of independent, non-executive directors, Oaktree’s Board of Directors unanimously recommended that Oaktree unitholders approve the transaction. The transaction is expected to close in the third quarter of 2019.

Oaktree (NYSE: OAK) is an investment manager specializing in alternative investments. As of December 31, 2018, Oaktree had $120 billion in assets under management. Sandler O’Neill + Partners L.P. served as financial advisor to the Special Committee of Oaktree’s Board of Directors and provided a fairness opinion on the transaction.

Brookfield (NYSE: BAM, TSX: BAM.A, Euronext: BAMA) is an asset manager with a focus on real estate, renewable power, infrastructure and private equity. It has over $350 billion in assets under management.

To read the press release: please click here.


Categories

Investment Manager M&A, Transactions