Brookfield Asset Management to Buy 62% of Oaktree Capital -- 3rd Update
March 13 2019 - 3:00PM
Dow Jones News
By Miriam Gottfried
Brookfield Asset Management Inc. is buying a majority stake in
Oaktree Capital Management, bringing an end to the
credit-investment firm's six-year run as a public company.
Brookfield will buy about 62% of the Oaktree business, acquiring
all outstanding shares of its common stock for $49 in cash, or
1.077 Brookfield shares. The deal represents a 12% premium to
Oaktree's closing price on Tuesday, the companies said.
Oaktree's preferred shareholders, which primarily consist of its
co-chairmen, Howard Marks and Bruce Karsh, their fellow co-founders
and other management and employees, will also sell 20% of their
nonpublicly traded preferred shares to Brookfield for the same
price. After the deal is complete, Oaktree's preferred shareholders
will own about 38% of the firm.
The two businesses will continue to operate independently, with
each remaining under its current brand and leadership. Two
representatives from Brookfield will join Oaktree's board, and Mr.
Marks will join Brookfield's board.
The deal will bolster the credit business of Brookfield, which
has traditionally focused on real estate, infrastructure and
private equity.
Oaktree is known for its distressed-investing expertise, but its
time as a public company has clashed with the longest bull market
in history. Its stock, including dividends, has climbed 61% from
its 2012 initial public offering through Tuesday's close, compared
with a 133% rise for the S&P 500.
The sale to Brookfield offers a path to liquidity for top
management that wasn't available previously.
"Because we're so countercyclical, we weren't adding assets,"
Mr. Marks said in an interview. "With public ownership, if you
can't produce a steady stream of assets and growth, it's not an
interesting story."
Oaktree's assets were $120 billion in December 2018, up only 5%
since 2015 as markets soared.
Being under the same roof as Brookfield should help Oaktree
smooth out the lumpiness in its business, said Brookfield Chief
Executive Bruce Flatt in an interview.
"Tucked under a broad alternative manager, you can run a very
client-centric business that ramps up during periods of time and
then de-escalates when you should be selling things," Mr. Flatt
said.
----Colin Kellaher contributed to this article.
Write to Miriam Gottfried at Miriam.Gottfried@wsj.com
(END) Dow Jones Newswires
March 13, 2019 14:45 ET (18:45 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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