- Bill Ackman’s Pershing Square Capital is offering $85 per share for Howard Hughes Holdings, valuing the company at $1.5B.
- The deal would increase Pershing’s stake in Howard Hughes from 38% to as much as 69%, with a $500M share repurchase program.
- Ackman criticized the company’s performance and proposed a merger that would make Pershing Square the largest owner while keeping leadership.
- Howard Hughes specializes in master-planned communities and owns substantial commercial real estate across the US.
Bill Ackman, founder of Pershing Square Capital, is pushing to take a controlling stake in Howard Hughes Holdings (HHH) in a $1.5B deal to restructure the real estate giant, per Commercial Observer.
Deal Details
Ackman’s firm is offering $85 per share for 11.7M HHH shares, a 20% premium over the current stock price, and also plans a $500M share repurchase program. This proposal seeks to increase Pershing Square’s ownership from 38% to as much as 69%.
Ackman envisions merging HHH with a new subsidiary, Pershing Square Holdco, to create a long-term, diversified holding company.
A Bold Offer
Ackman’s offer comes after years of dissatisfaction with Howard Hughes’ stock performance, which has lagged since its peak in 2014. The company, which specializes in master-planned communities, has seen its stock fluctuate significantly, from a high of $151.61 per share in 2014 to a low of $38.20 in 2020.
Ackman, who has invested in HHH since 2010, pointed to the stock’s “extremely disappointing” performance, noting that Pershing Square’s 14-year investment has only returned 2.2% annually despite significant business growth.
The proposed $85-per-share offer is nearly 20% higher than HHH’s closing price of $71.78 on January 10. If accepted, the offer would also allow HHH shareholders to remain part of the new combined company, with Ackman’s firm owning the largest stake.
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What’s Next?
Ackman’s vision for Howard Hughes is to turn it into a diversified holding company, with HHH acquiring operating businesses and assets in the private market. He likened his plan to Warren Buffett’s Berkshire Hathaway (BRK.B), aiming to build a conglomerate that makes controlling investments in diverse sectors.
However, Ackman emphasized there would be no immediate changes to HHH’s leadership or operations. CEO David O’Reilly and the senior management team would remain in place, and Ackman’s goal is for the company to continue executing its long-term strategy of developing master-planned communities.
Howard Hughes Holdings currently controls a portfolio of significant real estate assets, including several large communities in Texas, Maryland, and other states. The company owns more than 6.9 MSF of office space and thousands of residential units, making it one of the largest public CRE companies in the country.
Why It Matters
Ackman’s offer could catalyze Howard Hughes’s much-needed transformation, but it remains to be seen whether HHH shareholders and the board will embrace his vision.
With the deal valued at $1.5B, Ackman’s proposal could reshape Howard Hughes into a more diversified and growth-oriented company, positioning it for long-term success.
If successful, this deal could set a new precedent for how publicly traded real estate companies are managed and transformed in the coming years.ould face more turmoil in the coming months.
