Brookfield confirms General Growth bid

Brookfield Asset Management Inc., one of Canada's largest property-management companies, confirmed Wednesday it has offered $2.63 billion US for General Growth Properties Inc., the largest mall operator in the United States.

Chicago-based GGP owns 200 regional shopping malls across the country.

In the deal, which was first rumoured in media reports on Tuesday, Toronto-based Brookfield is offering $2.5 billion cash for new shares in GGP. Brookfield would invest a further $125 million in shares of a new company to be formed with General Growth's non-core holdings.   

Brookfield already has an extensive portfolio of high-rise office properties in the United States.

General Growth has been operating under bankruptcy protection and Brookfield's offer will form the starting point of a court-supervised auction process. The bid "is not subject to due diligence or any financing condition and is expected to create a floor value for the purpose of raising additional equity for the company," GGP said in a release.

GGP said the plan is designed to maximize value for all of its stakeholders and to allow General Growth to emerge as a standalone company with high-quality, income-producing assets and more than $13 billion US of restructured debt.   

Under the Brookfield plan, the Toronto-based company would pay $15 US per share for General Growth and $5 US per share for a newly formed General Growth Opportunities.   

Brookfield would also assist General Growth in raising up to an additional $3.3 billion through the sale of new equity, asset sales and by the issuance of new debt.   

The unsecured creditors of General Growth would also receive their money plus accrued interest. The friendly agreement between GGP and Brookfield, announced from Chicago, comes on the heels of a hostile $10 billion US bid for General Growth from Indianapolis-based Simon Properties.

A key difference between the Simon bid and the seemingly lower Brookfield offer appears to be that the latter is already itself a major creditor to General, to the tune of more than $1 billion.