Brookfield Business Partners’ improved offer for Teekay Offshore Partners is not enough to satiate at least one investor standing in opposition.
JDP Capital Management, which has argued vociferously against the deal in letters and a lawsuit, still believes Teekay Offshore is worth significantly more than the Toronto private equity firm’s improved $1.55 per share take-private offer.
“JDP is very disappointed in [Brookfield Business Partners’] offer because it represents an ultra-discounted price to even the liquidation value of Teekay Offshore’s assets,” portfolio manager Jeremy Deal told TradeWinds.
“A lack of investor relations, low public float and a limited partnership structure allowed Brookfield to violate minority-holder trust and trade a financial win for great reputational damage.”
After recapitalising the offshore player in 2017 and taking a 77.1% position in Teekay Offshore Partners in April 2019, Brookfield announced in May its intention to buy the remaining outstanding shares for $1.05 each.
Tuesday, the company bumped its offer up to $1.55, earning the approval of Teekay Offshore’s conflicts committee and the two independent advisors brought on to evaluate the deal.
But investors have decried the deals as unfair as they come at a considerable discount. JDP and 25 other shareholders argued in a May letter that the company is worth at least $4 per share. In an October 2018 presentation, JDP estimated upside of 200% or more from Teekay Offshore’s then $2.10 share price.
Further, two lawsuits, one spearheaded by JDP and another by a pair of individual investors seeks to block the deal, alleging Brookfield and Teekay Offshore’s leadership violated their responsibilities to shareholders.
The latter lawsuit, filed by Steven Monosson and Mark Whiting, also allege the conflicts committee was not truly independent as a member was a former employee of a Brookfield affiliate.
JDP has argued, both in court and out of it, that Brookfield created value with its recapitalisation in 2017, but quickly turned predator, trying to take over Teekay Offshore for pennies on the dollar.
JDP has also said Brookfield could try and take the company public again at a later date under a different name, domicile and structure.
After shooting up nearly 32% Tuesday, Teekay Offshore shares were trading flat at $1.53 in early trading Wednesday.
The company’s shares have never closed lower than $1.06.
