Brookfield's Forest City Takeover Wins Glass Lewis Support

(Bloomberg) -- Brookfield Asset Management Inc.'s $6.9 billion takeover of Forest City Realty Trust Inc. has garnered the support of a prominent shareholder advisory firm that argues the price provides an attractive premium for investors.

Glass Lewis & Co. urged Forest City investors to vote in favor of the transaction, which has been opposed by the company's former chief executive officer and co-chairman emeritus, Albert Ratner.

“Overall, we find that the proposed transaction offers Forest City shareholders a financially compelling exit point, including an attractive premium to the unaffected trading price of Forest City shares and a reasonable valuation relative to REIT peers,” Glass Lewis said in its report Monday.

Brookfield agreed in July to buy Forest City for $25.35 a share, about an 11 percent premium over the company's closing share price the previous day.

Ratner, who owns less than 1 percent of Forest City's shares, plans to oppose the transaction partly because the price comes at a discount to the estimated net asset value of the company and because only seven of its 12 directors supported the sale. Glass Lewis said it shared some of those concerns but concluded the company had run an exhaustive sales process and had limited alternatives to unlock the underlying value in the near term.

“The proposed transaction is favorable relative to the risks and uncertainties associated with the stand-alone alternative,” according to the report. “Based on the forgoing factors and the support of a majority of the board, we believe the proposed transaction is, on balance, reasonable and in the best interests of shareholders.”

To contact the reporter on this story: Scott Deveau in New York at sdeveau2@bloomberg.net

To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, Michael Hytha

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