We reported yesterday, that Bill Ackman filed a 13D with the Securities and Exchange Commission (SEC), whereby it requested General Growth Properties Inc (NYSE:GGP) to put itself up for sale. Ackman, the CEO of Pershing Square Capital owns more than 10 percent of the company’s shares, and this makes the hedge fund the second largest shareholder of General Growth Properties Inc (NYSE:GGP), after Canada’s Brookfield Asset Management Inc. (NYSE:BAM) (TSE:BAM.A). Brookfield owns over 40 percent of the shares (equals $8 billion). The long filing to the SEC explained in detail the history of proposals and bids that were under review, in which Brookfield Asset Management had a significant role.
In reply to Pershing’s concerns about any General Growth Properties Inc (NYSE:GGP), sell-off, Brookfield responded with a strong statement that it simply had no plans of buying Brookfield Says it is “Not Taking Any Steps To Acquire GGP” and is not having any discussions with the company’s board of directors or third parties. Brookfield also expressed their support for the present management and said that the business plan will bring “significant long term value for all stakeholders.”
Ackman’s filing discusses how the two shareholders collaborated on different plans and proposals. Brookfield’s response also acknowledges these discussions, but dismisses the possibility of any present interest. The response states,
“Over the past 12 months, at the request of Pershing Square, Brookfield Asset Management Inc. (NYSE:BAM) (TSE:BAM.A) considered and discussed a variety of possible transactions which would facilitate Pershing Square’s desire to maximize the value of and create liquidity for its interest in GGP. These discussions are not continuing.”
Barclays PLC (LON:BARC) (NYSE:BCS) also has some interesting observations over the recent ‘war of words’ between the popular shareholders. The assessment notes that Pershing is particularly wary of Brookfield’s swing in the board of directors as it called for “a special committee of directors wholly unaffiliated with Brookfield to consider the sale of the company to maximize shareholder value“, in the 13D filing on Thursday.
The analysis also notes that Simon Property Group, Inc (NYSE:SPG), may still have some interest in the potential sale of General Growth Properties Inc (NYSE:GGP), despite the unsuccessful negotiations in Q4 2011. The statement opines that if SPG were to make an offer again, they would bid for a 50 percent premium which translates to a offer price of $23-$24 per share. This contrasts from Pershing’s estimations of $ 28 a share price. The current trading price of GGP stock is $19.49, down 4 percent from the previous close of $20.32. The comments specifically state,
“With the $28 level now in the public domain, we think it adds a level of difficulty for Simon to negotiate a deal. In addition, we think the letter may be a play to attract other investors – which could include club deals with public players or private equity. “
The Blackstone Group L.P (NYSE:BX), sold about 10 million shares of GGP in the last week, bringing down its stake to 4 percent. The analysis observes,
“While not a large sale, the timing of the trade is interesting. Why would Blackstone sell even one share of GGP if there would be a potential transaction? Given Blackstone’s real estate acquisition activity YTD and the fact that Blackstone originally sided with SPG to bid on GGP in 2010, then it begs the question whether Blackstone believes a deal is likely. “
Brookfield Asset Management, has over $150 billion under management. Both funds, Pershing and Brookfield Asset Management Inc. (NYSE:BAM) (TSE:BAM.A), helped GGP in financing its 2009 bankruptcy. The bankruptcy filing was the largest in the real estate sector.