Canadian conglomerate Brookfield Asset Management Inc. has capped months of discussions with a $6.5-billion cash bid for Multiplex Group, an Australian property and construction company.
The proposed acquisition by Brookfield, formerly known as Brascan Corp., goes against the grain of a recent flurry of transactions that have led numerous Canadian public companies into the arms of foreign private equity firms.
Brookfield said Monday it has submitted an offer to buy Multiplex Group and its affiliated holdings, including its Multiplex Ltd. shares and Multiplex Property Trust units, for $5.05 a stapled security. "The offer values Multiplex at about $7.3-billion (Australian) on an enterprise value basis," the companies said.
Brookfield managing partner Jeffrey Blidner said Multiplex's local management team will provide a strong, long-term platform for expansion. "Brookfield views Multiplex as an integral part of its international growth strategy and intends to use Multiplex and its local management team to grow in the regions that Multiplex operates in."
Multiplex Group was founded by John Roberts in 1962 and Roberts Family Nominees is still the company's largest shareholder, with a 25.6 per cent stake. Sydney-based Multiplex, listed on the Australian Stock Exchange, revealed on Feb. 5 that it had received a conditional offer from Brookfield.
The Toronto company and the Roberts family have been negotiating ever since. Brookfield already holds about 4.2 per cent of Multiplex shares.
Multiplex Group's construction division has suffered multimillion dollar losses in recent years because of several protracted delays building Wembley Stadium in London. The company now faces lawsuits and regulatory inquiries over the problem-plagued British project.
Multiplex's board supports Brookfield's offer as "both fair and reasonable and there being no superior offer, they each will recommend security holders accept the offer," the companies said in a joint release. They also noted that the transaction has a "low degree of execution risk," since it does not require approvals from Australian consumer or competition regulators.
Rossa O'Reilly, an analyst with CIBC World Markets in Toronto, said Brookfield will look to restructure Multiplex Group by separating the development and construction operations from the income property portfolio. "They think this will be a good platform for doing more business in Australasia, for regional investment and development," he said in an interview.
Brookfield has been on the acquisition prowl for some time. In February, it was outbid in an attempt to buy shopping mall owner Mills Corp. by U.S. retail landlord Simon Property Group Inc. and Farallon Capital Management LLC.
Roma Luciw