|FOREST CITY REALTY TRUST, INC. filed this Form PREM14A on 09/21/2018|
On October 19, 2017 and October 20, 2017, each of the Brookfield special purpose entity and Sponsor A respectively executed a separate confidentiality agreement and each was provided with the Round 1 process letter along with access to the online data room containing certain nonpublic information about the Company.
In late October 2017, seven Round 1 indications were submitted. Five of the Round 1 indications were submitted by financial sponsors and contemplated an all-cash acquisition of the Company at the following prices:
In addition, two strategic parties (Strategic A and Strategic B) submitted Round 1 indications that contemplated structured, tax-efficient transactions involving a portion of our business. Specifically, Strategic As indication contemplated a structured, tax-efficient Morris Trust transaction that would involve a spin-off of certain of our Office segment assets including certain of our life science buildings (the Morris Trust transaction) and Strategic Bs indication contemplated a structured, tax-efficient sale of our Apartments segment and a substantial percentage of our Development segment.
On November 1, 2017, our Board convened a meeting to discuss the strategic process and the Round 1 indications, with members of our senior management and representatives of Lazard, Goldman Sachs and Sullivan & Cromwell in attendance. Representatives of Lazard and Goldman Sachs reviewed with our Board the status of the strategic process, feedback received from participants in the strategic process, the terms of the Round 1 indications, key alternatives to our standalone plan, including a sale of the Company, a strategic merger of the Company, and a spin-off of our Office or Apartments segments and various preliminary financial analyses of such alternatives. Following this review, our Board, in consultation with our senior management and representatives of Lazard, Goldman Sachs and Sullivan & Cromwell, discussed and deliberated the various Round 1 indications and the various alternatives potentially available to us. After discussion and deliberation, although there was significant disappointment expressed by many directors in the values reflected in the received indications, our Board believed that it should continue to pursue the strategic process (rather than conclude it at a preliminary stage) in order to permit our Board to definitively determine whether the strategic process would yield an alternative superior to our standalone plan from the perspective of maximizing stockholder value. Our Board therefore directed representatives of Lazard and Goldman Sachs to invite the parties that submitted Round 1 indications, other than Strategic B, to continue to participate in the strategic process, which our Board believed would preserve the competitive nature of the strategic process. Our Board concluded that it would not be in the best interests of the Company and our stockholders for Strategic B to continue to participate in the strategic process because our Board believed that a transaction on the terms and pricing contemplated by Strategic Bs Round 1 indication would have generated inferior stockholder value as compared to the transactions contemplated by the other Round 1 indications and because our Board believed that it would not be feasible to partner Strategic B with another participant in the strategic process in a manner that would result in a transaction that generated greater stockholder value based on the terms of the Round 1 indications that were submitted and feedback from participants in the strategic process. Further, our Board directed representatives of Lazard and Goldman Sachs to convey to representatives of Brookfield and Sponsor A that our Board would permit Brookfield and Sponsor A to partner in connection with the strategic process and to communicate with Strategic A and Sponsor B about the possibility of partnering with each other. In connection with its Round 1 indication, Sponsor B had expressed that it would need to join a bidding partnership in order to deliver a firm proposal to acquire the Company at the pricing contemplated by Sponsor Bs Round 1 indication; our Board concluded that a bidding partnership with Strategic A would be a potential path for Sponsor B to deliver such a proposal and recognized that neither Sponsor C nor Sponsor D had expressed an interest or need to enter into a bidding