Brookfield Office Properties Inc. (TSX:BPO) entered into a definitive merger agreement to acquire MPG Office Trust, Inc. (NYSE:MPG) from Appaloosa Management L.P., DW Investment Management LP, HG Vora Capital and others for approximately $190 million in cash on April 24, 2013. Under the terms of the merger agreement, the holders of MPG’s common shares will receive $3.15 per share in cash. Each outstanding options, restricted common shares and restricted common units ... would be converted into, and canceled in exchange for, the right to receive the consideration of $3.15. The merger agreement provides that, Brookfield will commence a tender offer to purchase all of MPG’s outstanding 7.625% Series A cumulative redeemable preferred stock for $25 per share in cash, without interest. Any preferred shares that are not tendered 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. Each share of 7.625% Series A cumulative redeemable preferred stock of the MPG issued and outstanding shall be converted into, and cancelled in exchange for, one share of 7.625% Series A cumulative redeemable preferred stock of Brookfield. Brookfield institutional partners have committed $600 million for the transaction and Brookfield Office Properties Inc. will provide an additional $140 million to fund the transaction. The merger agreement provides that, in connection with the termination of the merger agreement under specified circumstances, MPG may be required to pay to Brookfield a termination fee of $17 million and/or reimburse the Brookfield’s third-party transaction expenses up to an amount equal to $6 million. MPG is also required to pay Brookfield a no vote termination fee of $4 million and the expense reimbursement. Brookfield Office Properties Inc. has created a fund with institutional partners to finance the transaction. The Board of Directors of Brookfield together with the two Directors of MPG who were elected by the holders of MPG preferred shares, will be the Directors of the surviving Eetity. The officers of Brookfield will be the initial officers of the surviving entity. The completion of the merger transaction is subject to approval of MPG’s common stockholders, receipt of certain consents from MPG’s lenders, entering into ancillary agreement and other customary closing conditions. The transaction has been unanimously approved by Board of Directors of MPG. The transaction has also been approved by Board of Directors of Brookfield. Brookfield is expected to commence the tender offer in early May 2013. The merger is expected to close in the third quarter of 2013. The Eastdil Secured group of Wells Fargo Securities, LLC, BofA Merrill Lynch and Pierce, Fenner & Smith Incorporated acted as financial advisors for MPG and Julian Kleindorfer, Brad Helms, David Meckler, David Wheeler, Shi Su, Hilary Jay, Jay Strozdas, Andrew Fox Michael Brody, Ana O’Brien and David Taub, Matuszak, Tom Asmar, and Michael Feeley of Latham & Watkins LLP and Venable LLP acted as legal advisors for MPG. Joshua Mermelstein and Lee S. Parks of Fried, Frank, Harris, Shriver & Jacobson LLP and Goodwin Procter LLP acted as legal advisors for Brookfield. Wells Fargo Securities acted as financial advisor in the transaction and White & Case, L.L.P. acted as legal advisor to Wells Fargo.
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