Brookfield Asset Management is set to acquire 62% of Oaktree Capital, creating a $672 billion alternative investment behemoth.
The 120-year-old Canadian firm will pay roughly $6.8 billion for the stake in Oaktree Capital.
Following the transaction, the two companies will continue to operate independently, retaining their management, investment talent and brand, but will partner to leverage their strengths.
Together, they will have $3.5 billion in annual fee-related revenue generated from $672 billion in assets under management.
Oaktree co-chair Howard Marks will join Brookfield's board of directors, in addition to continuing his role at Oaktree. Brookfield chief investment officer and co-chair Bruce Karsh and Oaktree chief executive Jay Wintrob will both stay with the business.
Marks said: "The opportunity to join forces with Brookfield is ideal. Our firms share a culture that emphasises both investing excellence and integrity, and our businesses mesh without overlapping or conflicting."
"The rest of Oaktree management and I are excited about the combination of support and independence we expect. We look forward to having Brookfield's contribution to our ability to serve our clients, and to doing the same for them."
Brookfield chief executive Bruce Flatt said: "As we continue to strategically grow Brookfield, we are thrilled to be partnering with Oaktree and with its exceptional management team whose credit business is second to none."
"This transaction enables us to broaden our product offering to include one of the finest credit platforms in the world, which has a value-driven, contrarian investment style, consistent with ours."
The transaction is expected to settle in the third quarter of 2019 and is subject to approval from unitholders and regulators.
Under the terms of the agreement, Oaktree Class A units will be acquired for a per unit consideration of, at the election of Oaktree Class A unitholders, either US$49.00 in cash or 1.0770 Brookfield Class A shares.
In addition, the founders, senior management, and current employee-unitholders of Oaktree Capital Group Holdings, the holder of all outstanding Class B units of Oaktree as well as a direct interest in certain Oaktree operating entities, will sell to Brookfield 20% of their units for the same consideration as the Oaktree Class A unitholders.
Oaktree co-founder Howard Marks visited Sydney in late October. At the time, he said the current bull market was in a late stage but it could still go "up, sideways or down."
He said while optimistic investors have pushed up asset prices, the US economy has risen steadily - making it hard to predict what could be next for the markets.
"Where are we now? I think the current [up] cycle is in the eighth innings. In baseball, in a regular game there are nine innings. Sometimes it goes longer - there's a tie - but vast majority of games go nine innings," Marks said.
"The trouble with investing is, I can tell you we are in the eighth innings - and I believe it - but I can't tell you how many innings there are in the game and this one may go nine or 11 or 14."
"So I am not telling anybody that they should get out."
"From a market that is above the mid-point or the fair value or the instrinsic value - whatever you want to call it - it can still go either up or sideways or down. What changes is the odds."