Billionaire hedge fund manager Bill Ackman will make repeated efforts to push General Growth Properties Inc (NYSE:GGP) to put itself up for sale. The second largest US mall owner has once rejected his attempt to influence a sale.
“You can expect you will hear more from us on this topic,” the activist investor, Ackman, said in a telephonic interview. He said that General Growth executives should analyze where the GGP shareholders would be after 5-10 years, if the company remains independent, versus if it is merged with Simon Properties. A merger will bring substantial premium, and the combined company will benefit from cost synergies and revenues not available to standalone GGP. However, General Growth argues that it is better off independent, and has jumped more than 50 percent after the Bankruptcy protection in 2010.
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Bill Ackman, the chief of Pershing Square Capital Management, said on August 23, that Simon Properties Group was interested in buying General Growth Properties Inc (NYSE:GGP). The takeover by Simon will be viewed as a merger, because the shareholders of General Growth will keep their shares in the combined company.
However, Simon Property Group, Inc (NYSE:SPG) CFO Stephen Sterrett rejected Ackman’s claim on September 11th, during a Barclays conference, by saying, “There’s been a fair bit of speculation and inquiry lately about General Growth and our rumored interest in that company, and I think it’s important to respond and set the record straight. We have no interest in General Growth.” Bill Ackman is the second-largest shareholder in General Growth, with a 10 percent stake.
Brookfield Asset Management Inc. (NYSE:BAM) (TSE:BAM.A), which has 42 percent ownership in GGP, doesn’t want to sell its stake. Ackman had played a key role in persuading Brookfield to recapitalize General Growth when it was on the verge of bankruptcy in 2010.
“The Brookfield Asset Management Inc. (NYSE:BAM) (TSE:BAM.A) philosophy is largely to invest for the very long term,” Cedrik Lachance, an analyst at Newport Beach, California-based Green Street Advisors Inc, said. “It is a portfolio of very good quality real estate, and they like to control platforms.”
Simon Property Group, Inc (NYSE:SPG) has a market value of $49.6 billion, compared to General Growth’s $18.8 billion. General Growth Properties Inc (NYSE:GGP) has 141 million square feet of leasable space, in 149 malls.