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Brookfield Asset Management to acquire 62% of Oaktree Capital

Howard Marks, co-chairman of Oaktree Capital Group

Brookfield Asset Management agreed to acquire about 62% of Oaktree Capital Group's business for $4.7 billion, funded 50% in cash and 50% with 51.4 million in Brookfield shares, according to a document filed Wednesday by Oaktree with the Securities and Exchange Commission.

As part of the transaction, Brookfield will acquire all outstanding Oaktree Class A shares for $49 in cash or 1.1 shares in Brookfield Class A stock, a news release announcing the deal said.

Oaktree's board has unanimously recommended that Oaktree shareholders approve the deal. Upon the deal's closing, Oaktree will become a private company, according to the filing.

Both Brookfield and Oaktree will continue to operate their respective businesses independently, with Howard Marks continuing to serve as co-chairman of Oaktree, Bruce Karsh as co-chairman and chief investment officer and Jay Wintrob as CEO. Messrs. Marks and Karsh will continue to have operating control of Oaktree as an independent entity for the foreseeable future.

When the deal closes, Oaktree will retain voting control and 8 of 10 board seats.

In addition, Mr. Marks will join Brookfield's board of directors.

The two companies together will have about $475 billion in assets under management. Oaktree had $120 billion in AUM as of Dec. 31, with 76% in credit strategies. Oaktree's credit business includes its 20% interest in credit manager DoubleLine Capital. DoubleLine accounts for 9% of Oaktree's fee revenue, Oaktree's regulatory filing shows, compared to 59% from Oaktree's closed end funds, 19% from open-end funds and 13% evergreen funds.

Brookfield's purchase of the majority interest of Oaktree will have no impact on DoubleLine, spokesman Loren Fleckenstein said. "DoubleLine is an independent company," he said.

Brookfield CEO Bruce Flatt said in the news release that the "transaction enables us to broaden our product offering to include one of the finest credit platforms in the world."

Mr. Marks said in the release that the "opportunity to join forces with Brookfield is ideal. Our firms share a culture that emphasizes both investing excellence and integrity, and our businesses mesh without overlapping or conflicting."