Tuesday, February 13, 2007

Brookfield Asset Management (BAM)

Shares of BAM are up more than 4% today. BAM investors are encouraged that mall developer Mills (MLS) has rejected BAM's $21 a share offer in favor a bid from a group led by Simon Properties for $24 a share. There's doubt that BAM will top the $1.6 bln offer from Simon, but Mills is giving BAM three days to decide. Brookfield will receive a $40 mln breakup fee from Mills if it walks.

BAM is a $20 bln company and while there may have been some risk arb short unwinding, along with relief that it isn't getting into a complex set of issues with accounting problems that MLS had been confronting, and that it will receive a breakup fee (deep breath), those factors seem hardly reason enough for the stock to have rallied as much as it did today let alone in recent days.

BAM shares are now trading about $4/shr above where they were when it announced the deal to buy MLS last month. Yes, there were better than expected earnings last week, but I'd say it's not a bad idea to keep your eyes and ears open to options volume in the days ahead for any sign of speculative action that could point to BAM itself become a target. Whether its a takeover or plain old growth the chart sure looks dandy

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