Bill Ackman’s Pershing Square Capital Management has proposed an offer to acquire the remaining shares of Howard Hughes Holdings, a major real estate developer, for $85 per share, CNBC reports.
This offer is aimed at buying out the portion of the company that Pershing does not already own.
In a letter to the board of Howard Hughes, Ackman expressed satisfaction with the company’s progress since it went public over 14 years ago. However, he also noted that, like many other long-term shareholders, he has been disappointed with the company’s stock price performance. Pershing Square, which currently holds around 38% of Howard Hughes, has suggested forming a new subsidiary to merge with the company.
The proposal includes an option for stockholders to receive a majority of their payment in cash at the offer price of $85 per share, representing a premium of 38.3% over Howard Hughes’ unaffected stock price and an 18.4% premium over its closing price as of last Friday. The remainder of the payment would be in stock of the post-merger entity.
Following the announcement, Howard Hughes’ stock surged by 11%, reaching $79.67 per share in premarket trading.
Ackman’s investment firm first entered Howard Hughes in 2010, purchasing shares at $47.62 each in a $250 million rights offering. Over the ensuing 14 years, the investment has yielded a total return of 35%, or a modest annual return of 2.2%. Ackman also pointed out that Howard Hughes has not paid any dividends since it became a publicly traded company.
In his letter, Ackman emphasized that under the proposed acquisition, Howard Hughes would continue to operate under its current leadership team, including CEO David O’Reilly, with no changes to the company’s strategy or workforce. Ackman assured that the deal would not result in any job losses and that all employees would remain with the company following the merger.
As of now, Howard Hughes has not provided a public response to the offer, and further developments are expected as both parties assess the proposal.
