Toronto-based Brookfield Asset Management Inc. is spending $7.5 billion US to buy The Mills Corp., a major U.S. chain of shopping malls that has been in recent financial difficulty.

Brookfield, one of the most highly respected property developers in Canada, says the purchase of The Mills will include a mix of cash, preferred stock and assumed debt.

Brookfield three-month trading

Brookfield will pay $21 US a share for the chain, which is based in Chevy Chase, Md., a sum that could reach $1.35 billion US if all the shares are taken up. But shareholders can opt for shares in a new Brookfield subsidiary instead.

The rest of the purchase price will be made up of assumed debt.

The transaction is expected to close in the second half of 2007 after approval by shareholders of The Mills.

The Mills three-month trading

In a brief comment on The Mills and its recent financial troubles, Brookfield's CEO Bruce Flatt said: "We are pleased to be able to work with The Mills Corp. to move beyond the recent issues it has encountered.

"We look forward to working with management of The Mills in getting back to business and focusing on service excellence to attract premium tenants to this high-quality retail portfolio."

Brookfield will provide The Mills with $1 billion US in temporary financing until the deal closes.

Faces bankruptcy

The Mills has restated its financial reports after turning up financial irregularities. It has also warned that it faces bankruptcy if it cannot pay off $1 billion US in loans that come due on March 31. 

Mark Ordan, CEO and president of The Mills, expressed satisfaction that a deal has finally been done.

"With this transaction, we have completed our strategic alternatives process by joining with a world-class real estate owner and operator. After a very competitive process, in which our board considered numerous alternatives for the company, we believe we have achieved an outcome that is the best possible result for all involved."

The deal will benefit Brookfield, he said, and provide the funds that The Mills needs to improve its holdings.

"This merger will provide the resources to upgrade our properties, reinforce our organization and continue to attract premium tenants to The Mills concept," Ordan said.

Recently sold Vaughan Mills shopping centre

The Mills owns 38 major shopping malls, along with retail and entertainment centres in the United States and Canada, totalling about 47 million square feet. It owned the Vaughan Mills shopping centre in suburban Toronto until its recent sale.

Brookfield has a reputation as a canny investor that owns or manages premier office towers in major cities across Canada and the United States, with a total value of more than $50 billion US.

The flagship building is BCE Place in Toronto, but it also owns key buildings in downtown Manhattan and Chicago, including much of the former Olympia and York real estate empire that it bought at firesale prices in the early 1990s.

Brookfield's A shares rose 33 cents on the Toronto Stock Exchange following the announcement Wednesday to $56.76.

The Mills rose by $4.69 or 26 per cent on the New York Stock Exchange to $22.46 US.