The activist investor who helped split Hawaii firm Alexander & Baldwin Inc. into two companies recently is trying to initiate change at another company with a large local presence.
Bill Ackman of hedge fund Pershing Square Capital Management LP has urged General Growth Properties Inc., owner of Ala Moana Center and numerous malls around the country, to try to sell itself for significantly more than its stock value.
Ackman made his position public in a letter filed Thursday with the U.S. Securities and Exchange Commission, saying General Growth’s largest rival and biggest shareholder have both expressed interest in taking over the mall owner.
Ackman’s letter said his firm, which is General Growth’s No. 2 shareholder, has discussed a takeover of the mall owner with rival Simon Property Group Inc. as well as Brookfield Asset Management Inc., General Growth’s largest shareholder.
Pershing Square and Simon Property discussed a deal in which Simon would acquire its competitor for 0.1765 of a Simon share for each General Growth share, according to Ackman’s letter. Were that ratio used with Simon’s Aug. 22 closing stock price, General Growth would be valued at about $28 a share.
General Growth stock climbed 9.7 percent to $20.32 in New York trading Thursday after Ackman filed his letter. It was the stock’s biggest increase since Aug. 9, 2011, and its highest price in almost four years. General Growth’s stock slipped 2.8 percent, or 56 cents, to $19.76 on Friday.
Simon has been "effectively handcuffed and gagged" from pursuing a deal because of Brookfield’s influence over General Growth, Ackman wrote in his letter to General Growth’s board. Brookfield increased its stake in the company to about 40 percent after owning about 29 percent, including warrants, in its initial investment.
"Our goals are to ensure that a level playing field exists so that Simon, Brookfield and potentially other parties can compete to acquire the company," Ackman said in his letter. Brookfield should be stopped from "unfairly acquiring control" of General Growth without paying a "premium in a competitively negotiated transaction," he wrote.
Les Morris, a Simon Property spokesman, declined to comment on Ackman’s letter.
General Growth’s board and management team "will carefully review Pershing Square’s letter," the company said in a statement Thursday.
Brookfield said it won’t pursue a takeover or sale of Chicago-based General Growth.
"Brookfield is not taking any steps to acquire GGP nor is it having any discussions with third parties in that regard," the Toronto-based real estate investment company said in its statement.
"Brookfield has no interest in selling its stake in GGP. We are 100 percent supportive of the current management team of GGP."
Brookfield said in its statement that it considered "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." Those discussions "are not continuing," according to the statement.
Simon would be a logical buyer for General Growth partly because of cost savings it could achieve by purchasing its competitor, Craig Guttenplan, an analyst at CreditSights Inc. in London, said in a telephone interview Thursday.
Ackman is "an activist investor," Guttenplan said. "He’s looking for ways to maximize value."
In April, Ackman became A&B’s largest investor by acquiring 10 percent of the company’s stock with a partner, and several months later A&B announced it would spin off subsidiary Matson Navigation Co. in a move completed in June.
