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GGP details no-shop, termination fee provisions in Brookfield Property deal

Regional mall real estate investment trust GGP Inc. disclosed certain no-shop and termination fee provisions in its merger deal with Goldfinch Merger Sub Corp., a unit of Brookfield Property Partners LP.

Under the no-shop provision, GGP may not solicit any transaction that would lead to an acquisition of more than 20% of the company or its assets. Prior to shareholder approval of the deal, however, GGP's special board committee may consider any unsolicited, bona fide proposal that it deems to be superior to the merger deal. The superior proposal is deemed to be a proposal for an acquisition of at least 50% of the REIT or its assets.

The deal also provides GGP with the right to terminate the deal under certain conditions, whereupon GGP would be required to pay Brookfield Property or its affiliate a $400 million cash termination fee. The termination rights apply if GGP enters into a definitive deal regarding the superior proposal, if the company's board or special committee changes its recommendations, if the required shareholder approval is not obtained, if the deal is not consummated by Sept. 26 and if GGP materially breaches certain of the merger deal's covenants.

Accordingly, Brookfield Property may terminate the deal and pay GGP a reverse cash termination fee of $1.2 billion if it or Goldfinch fails to consummate the deal when required and if the parent unit holder consent is not obtained. GGP, however, may elect to reject such fee and preserve its rights to pursue other remedies in conjunction with the merger deal.

Brookfield Property recently agreed to buy out all outstanding common shares it and its affiliates do not already own in GGP. Under the terms of the deal, Goldfinch will merge with GGP, with the latter as the surviving entity. GGP shareholders may opt to receive $23.50 per share in cash, or one Brookfield Property unit or one share of a new BPY U.S. REIT security for each GGP common share they own, subject to proration, based on total cash consideration of $9.25 billion.