Under the deal, Brookfield will pay $21 per share for each Mills share, an 18 percent premium over Mills' closing price Tuesday. Including debt and preferred stock, the deal is worth $7.5 billion.
Mills owns 38 properties in the United States, totaling about 47 million square feet. Toronto-based Brookfield, focused on property, power and infrastructure assets, has more than $50 billion of assets under management.
Earlier this month, Mills warned that a heavy debt load might force it into bankruptcy. In a Securities and Exchange Commission filing Jan. 9, Mills said it may lack enough funds to keep operating past March 31 and may have to sell all or part of the company to pay off a $1 billion loan due on that date.
Brookfield agreed to assume that $1 billion loan that Mills owes to Goldman Sachs Mortgage Co.
Mills, based in Chevy Chase, Md., has entertained several options to salvage itself, including two proposals Tuesday from major shareholders to invest hundreds of millions of dollars into the company. The investors, hedge fund Farallon Capital Management and the Israeli firm Gazit-Globe, said they feared Mills would sell itself at a low price out of desperation.
But Mills CEO Mark Ordan said Wednesday that after considering several options, the acquisition by Brookfield has "achieved an outcome that is the best possible result for all involved."
The deal was unanimously approved by Mills' board, but has to be approved by the company's shareholders at a special meeting. Mills said it expects the merger to close in the second half of 2007.
Mills will become part of a new Brookfield unit, with Mills shareholders entitled to choose either $21 per share in cash, or up to a 20 percent stake in the new company, which will be publicly traded and managed by Brookfield.