Teekay Offshore Partners LP (NYSE: TOO), a Hamilton, Bermuda-based midstream services provider to the offshore oil industry, has accepted an offer from the private equity group of Brookfield Asset Management to acquire publicly held common units not already owned by the investor. Brookfield will pay US$1.55 in cash per unit, up from a US$1.05 offer made earlier this year. In 2017, Brookfield acquired 60 percent of Teekay Offshore from Teekay Corp (NYSE: TK), a Vancouver-based marine energy transportation, storage and production business, for US$750 million.
Teekay Offshore Partners Announces Agreement for the Acquisition of Its Publicly Held Common Units by Brookfield
HAMILTON, Bermuda, Oct. 01, 2019 (GLOBE NEWSWIRE) — Teekay Offshore Partners L.P. (Teekay Offshore or the Partnership) (NYSE:TOO) today announced that it has entered into an agreement and plan of merger (the Merger Agreement) with Brookfield Business Partners L.P., and certain of its affiliates and institutional partners (collectively, the Brookfield Consortium). Pursuant to the Merger Agreement, the Brookfield Consortium will acquire by merger all of the outstanding publicly held common units representing limited partner interests of the Partnership (common units) not already held by the Brookfield Consortium (unaffiliated unitholders) in exchange for $1.55 in cash per common unit (the cash consideration). The cash consideration represents an increase of $0.34 (28.1 percent) per common unit when compared to the closing price per common unit on May 16, 2019, immediately prior to Brookfield’s initial offer and a premium of $0.39 (33.6 percent) to the $1.16 closing price per common unit on September 30, 2019. As an alternative to receiving the cash consideration, each unaffiliated unitholder will have the option (the unit option) to elect to receive one newly designated unlisted Class A Common Unit of the Partnership (the equity consideration) per common unit. The Class A Common Units will be economically equivalent to the common units to be held by the Brookfield Consortium following the closing of the merger, but will have limited voting rights and limited transferability.
In connection with the merger, the Partnership will deliver election materials to the unaffiliated unitholders that will include a description of the terms of the Class A Common Units and instructions for electing to receive the equity consideration. Unitholders who do not elect to receive the equity consideration prior to the election date set forth in the election materials will receive the cash consideration. Pursuant to the terms of the Merger Agreement, the Partnership’s outstanding preferred units will be unchanged and remain outstanding by virtue of the merger.
The conflicts committee, composed of non-executive, independent directors (the Conflicts Committee), of the board of directors of the Partnership’s general partner (the Board), after consultation with its independent legal and financial advisors, unanimously approved the Merger Agreement and determined that the transaction contemplated thereby was advisable and in the best interests of the Partnership and the unaffiliated unitholders. Subsequently, on the recommendation of the Conflicts Committee, the members of the Board unanimously approved the Merger Agreement and the transactions contemplated thereby.
The Brookfield Consortium, the Conflicts Committee and the Board agreed to include the unit option in the Merger Agreement, however, neither the Conflicts Committee nor the Board are making any recommendation whether an unaffiliated unitholder should elect the unit option nor did they evaluate the terms of the equity consideration in determining whether to approve the Merger Consideration.
The merger is expected to close in the fourth quarter of 2019 and is subject to satisfaction of certain customary conditions. Upon the closing of the merger, the common units will cease to be publicly traded. The Partnership will continue to file certain reports with the Securities and Exchange Commission (the SEC) following the closing of the merger.
Evercore Group L.L.C. acted as financial advisor and Potter Anderson & Corroon LLP acted as legal counsel to the Conflicts Committee.
About Teekay Offshore
Teekay Offshore Partners L.P. is a leading international midstream services provider to the offshore oil production industry, primarily focused on the ownership and operation of critical infrastructure assets in offshore oil regions of the North Sea, Brazil and the East Coast of Canada. Teekay Offshore has consolidated assets of approximately $5.2 billion, comprised of 58 offshore assets, including floating production, storage and offloading units, shuttle tankers (including seven new buildings), floating storage and offtake units, long-distance towing and offshore installation vessels, and a unit for maintenance and safety. The majority of Teekay Offshore’s fleet is employed on medium-term, stable contracts.
Teekay Offshore’s common units and preferred units trade on the New York Stock Exchange under the symbols “TOO”, “TOO PR A”, “TOO PR B” and “TOO PR E”, respectively.
For Investor Relations
Jan Rune Steinsland
Tel: +47 97052533