Bill Ackman’s Pershing Square offers to take over real estate developer Howard Hughes
Bill Ackman, CEO of Pershing Square Capital Management, speaking at the Delivering Alpha conference on September 28, 2023 in NYC.
Adam Jeffery | CNBC
Bill Ackman’s Pershing Square is creating a new integrated entity. Howard Hughes HoldingsHe is offering the real estate company $85 per share.
“While we are pleased with the strong business growth of Howard Hughes Holdings over 14 years since it went public, we, along with other long-term shareholders and this board, have been disappointed by the performance of the company’s share price,” he wrote. Ackman in a letter to the board of Howard Hughes.
Ackman proposed forming a new subsidiary of Pershing, currently 38% owned by Howard Hughes, which would merge with the real estate developer in The Woodlands, Texas.
“Shareholders have the option to receive a majority of the merger consideration in cash for $85.00 per share — 38.3% of the intact stock price and 18.4% of last Friday’s closing price — and the balance in the post-merger company,” the letter said.
Shares of Howard Hughes jumped 10% to $78.95 on the news Monday. CNBC has reached out to the company for comment.
Pershing first invested in Howard Hughes in November 2010 in a $250 million rights offering at $47.62 per share. Over the past 14 years, Pershing’s investments have produced a 35% total return, or a 2.2% compound annual return, Ackman said. He added that the company has paid zero dividends since its inception.
“The company’s share price performance has been extremely disappointing, especially given our high regard for this board and the company’s excellent management team led by David O’Reilly and nearly a thousand employees at Howard Hughes. I’ve known it for more than a decade.” Ackman wrote in the letter.
Under the proposed deal, Ackman said Howard Hughes will remain intact and will continue to be led by its current management team led by CEO David O’Reilly.
“We do not intend to make any changes to the HHC organization, its employees or its long-term strategy,” Ackman said. “We expect all existing HHH employees to remain employed as a result of the transaction.”
