Brookfield Asset Management Inc. agreed to acquire roughly 62% of Oaktree Capital Group LLC.
Brookfield Asset Management will acquire all of Oaktree Capital's class A units for $49.00 in cash, or 1.0770 Brookfield Asset Management shares, at the choice of Oaktree Capital shareholders. The deal represents a 12.4% premium on Oaktree Capital's class A units and shares, based on the March 12 closing price.
The founders, senior management and employee unit holders of Oaktree Capital Group Holdings GP LLC, which holds all of Oaktree Capital's outstanding class B units and has a direct interest in Oaktree Capital's operating entities, will sell 20% of their holdings to Brookfield Asset Management for the same price.
Oaktree Capital Group Holdings unit holders will own the remaining 38% stake of Oaktree Capital Group. Oaktree Capital may declare and pay a first-quarter dividend on its class A units of up to $1.05 per unit, but cannot pay any further distributions on the class A units unless the transaction has not closed by Sept. 30.
The transaction is expected to close in the third quarter.
The two companies will continue to run their businesses independently and retain their current brands and management and investment teams, with Oaktree Capital co-Chairman Howard Marks joining Brookfield Asset Management's board.
The total consideration paid by Brookfield Asset Management will be paid 50% in cash and 50% in shares, such that elections made by Oaktree Capital shareholders will be made on a per unit basis and will be subject to pro-ration. The cash portion will be paid using Brookfield Asset Management's available liquidity.
Starting in 2022, former employee unit holders and founders, senior management and current employee unit holders can sell their remaining Oaktree Capital Group units, according to a set liquidity schedule, such that Brookfield Asset Management could own 100% of Oaktree Capital Group by 2029.
Perella Weinberg Partners LP acted as financial adviser for Oaktree Capital Group, while Simpson Thacher & Bartlett LLP and Munger Tolles & Olsen LLP were its legal advisers. Weil Gotshal & Manges LLP and Torys LLP served as legal advisers to Brookfield Asset Management. Sandler O'Neill & Partners LP acted as financial adviser and Mayer Brown LLP served as legal adviser to the special committee of Oaktree Capital Group's board.