Billionaire investor Bill Ackman, CEO of Pershing Square Capital Management, wants to take over real estate developer Howard Hughes Holdings.
He’s offering $85 per share to buy out the company’s stockholders.
Why Ackman Made the Offer
Ackman says Howard Hughes has made great business progress over the last 14 years, but the company’s stock hasn’t performed well. His firm, Pershing Square, already owns 38% of Howard Hughes and wants to merge it with a new entity under their control.
In a letter to the company’s board, Ackman pointed out the stock’s poor returns: “The company’s stock price is disappointing, despite having an amazing management team and dedicated employees.”
The Deal at a Glance
Stockholders could choose to get most of their payment in cash at $85 per share, a price that’s 38% higher than the stock’s previous low and 18% more than Friday’s closing price.
The rest would be paid in stock from the new company formed after the merger.
Stock Jumps on News
Howard Hughes shares shot up 10% to $78.95 after the news broke. Ackman’s investment firm first bought into Howard Hughes in 2010 at $47.62 per share.
Over the years, the investment has only returned about 2.2% annually, according to Ackman.
What Happens Next
If the deal goes through, Ackman said there would be no big changes to Howard Hughes.
Current CEO David O’Reilly would stay in charge, and all employees would keep their jobs.
Ackman emphasized that Howard Hughes would stick to its long-term strategy. “We’re not planning any changes to the team or the company’s goals,” he said.
This potential merger could mark a big shift for the real estate developer, boosting its value and stockholder confidence.