BAM Merges with Johnson Controls

Global alternative asset manager, Brookfield Asset Management Inc. ( BAM - Snapshot Report ) , recently announced a strategic merger with Johnson Controls to create growth synergies under the new name – Brookfield Johnson Controls. While the deal is expected to culminate by the end of this year, the amalgamated company is projected to commence operations from the first half of 2013.

Armed with over 162,000 employees, Johnson Controls is a global leader and provider of diversified technology and energy solutions for electronic vehicles, automobiles and buildings in over 150 countries.

Brookfield Johnson Controls is the outcome of the association of the properties of Brookfield and Johnson Controls in Australia and New Zealand. Accordingly, Brookfield Multiplex Services will be with the Australian and New Zealand business of Johnson Controls Global WorkPlace Solutions.

Brookfield Multiplex Services offers real estate, facilities and project management services to a range of large corporate and government occupants in New Zealand and Australia. On the other hand, Johnson Controls Global WorkPlace Solutions is also a leader in facilities, corporate real estate and energy management services.

This marks the second partnership between the two entities, the first being formed in Canada in 1992. Post merger, the Canadian entity will be renamed Brookfield Johnson Controls as well.

Through this merger, both the entities seek to focus on international expansion. Alongside, the companies expect to diversify into more target sectors such as life sciences, technology, industrial and oil and gas markets. We believe that the merger should enhance the efficiencies of both the companies since they share common growth goals.

Moreover, Brookfield’s internal research estimates the outsourced property services market in Australia and New Zealand to be worth about A$18 billion, which is further projected to grow by around 5% annually. This extends the opportunities for the merged entity, which anticipates $250 million in annual revenues within the first year and is expected to double in 5 years, thus laying significant growth prospects for the future.

Brookfield’s peer group includes SL Green Realty Corp. ( SLG - Snapshot Report ) and Vornado Realty Trust ( VNO - Analyst Report ) . Currently, the company carries a Zacks #3 Rank, which implies a short-term Hold rating on the stock.