Feb. 5 (Bloomberg) -- Brookfield Asset Management Inc., a Canadian property and infrastructure investor, agreed to acquire Longview Fibre Co. for $1.6 billion in cash to bolster its timberland-management business.

Longview investors would receive $24.75 a share, 18 percent more than the closing price of $21.01 on Feb. 2, Toronto-based Brookfield said today in a statement. Brookfield will assume about $550 million of debt now held by the Longview, Washington- based real estate investment trust.

Buying Longview will give Brookfield 588,000 acres of Douglas fir and hemlock forests in Washington and Oregon. The deal also advances the plans of Chief Executive Officer J. Bruce Flatt to add assets that generate management fees for Brookfield and will entice institutions to invest as co-owners through a new fund formed to hold the assets.

``This is part of the shift in strategy going back to 2003,'' said Lieh Wang, vice president of Canadian equities at CIBC Global Asset Management, which manages about C$60 billion ($51 million) and owned about 4.4 million Brookfield shares as of Sept. 30. ``Longview is consistent with this decision to position the company more in long-life assets with recurring income streams.''

Brookfield has announced at least seven acquisitions in the past eight months.

Mills Merger

The company's $1.35 billion merger agreement with U.S. shopping mall owner Mills Corp., announced Jan. 17, was thrown into doubt today after Mills received an unsolicited $1.56 billion bid from Simon Property Group Inc. and San Francisco- based hedge fund Farallon Capital Management LLC. Property leasing generates the highest portion of Brookfield's earnings.

Brookfield changed its name from Brascan Corp. in 2005 as it got rid of mining businesses to focus on managing real estate, power plants and timberland. The Longview acquisition will add to the 2 million acres Brookfield already owns in Canada, the U.S. and Brazil.

``Timber's appeal has been growing over the past number of years,'' Sam Pollock, managing partner of Brookfield, said in a telephone interview. ``People are looking for long-duration assets. It's a high-margin business and generates sustainable cash flows. We prefer to own timberlands as opposed to being in the lumber business because there's a lot less volatility on the timberland side.''

Timberland Expansion

Brookfield in 2005 bought 635,000 acres of timberlands in British Columbia from Weyerhaeuser Co. of Federal Way, Washington. The company also invests in ports, transmission lines and office buildings, and it is one of the largest landlords in Manhattan, where it controls the World Financial Center through 50 percent-owned Brookfield Properties Corp.

Shares of Longview rose $3.44, or 16 percent, to $24.45 at 4:21 p.m. in New York Stock Exchange composite trading. Brookfield rose $1.01, or 2.1 percent, to $49.88 in New York, the biggest gain since Dec. 5.

Longview agreed to pay Brookfield a termination fee equal to 3.5 percent of the roughly $1.6 billion equity value of the acquisition, or about $56 million, if it decides to sell itself to another buyer, Pollock said.

The strong growth rates and substantial existing timber inventories make the Longview-held lands among the most valuable in the world, Brookfield said. Brookfield also will acquire the company's pulp and paper mills in Longview and 15 corrugated container plants in 12 states.

Debt Financing

Brookfield has arranged for $1.35 billion of debt financing from Merrill Lynch & Co., Royal Bank of Canada and Bank of Nova Scotia to fund the acquisition, Pollock said. The debt will be secured by Longview's assets.

Longview put itself up for sale last year after rejecting an unsolicited $1.33 billion takeover proposal from two private equity firms, Campbell Group LLC and Obsidian Finance LLC, both based in Portland, Oregon. The company conducted an auction through Goldman, Sachs & Co., said Pollock.

Being acquired by Brookfield ``is the best alternative for our shareholders,'' Longview Chief Executive Officer Richard Wollenberg said in the statement.

Brookfield currently holds about 3 million shares of Longview, representing about 4.6 percent of the outstanding shares. Brookfield said it expects to complete the purchase in the second quarter, subject to approval by Longview shareholders and antitrust clearance.

Merrill Lynch advised Brookfield, while Goldman and Banc of America Securities LLC advised Longview.

Earnings

Brookfield plans to release fourth-quarter earnings on Feb. 9. In the third quarter, profit fell 67 percent after year- earlier results were boosted by a one-time gain from the sale of the company's remaining stake in nickel miner Falconbridge Ltd.

Net income fell to $245 million, or 60 cents a share, from $736 million, or $1.82 a share, a year earlier. Revenue rose 3.6 percent to $1.41 billion. Brookfield earned $29 million from specialty funds in the quarter, up from $17 million a year earlier. Investment and other income rose to $180 million from $95 million. Timberland income climbed to $24 million from $13 million.

To contact the reporter on this story: Hui-yong Yu in Seattle at hyu@bloomberg.net; Christopher Donville in Vancouver at cjdonville@bloomberg.net

Last Updated: February 5, 2007 16:30 EST