Would You Really Want These Shares?
The way that Brookfield has structured this deal, I’m not sure that anyone would really want to own the newly issued shares. In the press release, the company said:
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.
So, essentially, those that own TOO can elect to receive shares of the partnership, but these shares will give investors little-to-no say on what happens at the company. Moreover, transfering the shares will be difficult.
The Bottom Line: Take The Cash And Run
Would you want to invest in a stock that gives you limited voting rights and will be hard to offload should something go wrong? I wouldn’t either.
If you elect to take the equity in this deal, that’s essentially what you will be doing If I owned shares of TOO stock before today and I saw this news, I’d be ready to cash in. There’s nothing wrong with taking profits!
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