Bill Ackman, CEO of Pershing Square Capital Management, speaks at the Delivering Alpha conference in New York on September 28, 2023.
Adam Jeffery | CNBC
Bill Ackman’s Pershing Square is forming and merging with a new entity Howard Hughes Holdingsoffering $85 per share to existing shareholders of the real estate company.
“While we are pleased with the substantial business progress Howard Hughes Holdings has made in the more than 14 years since its listing, we join other long-term shareholders and the board of directors in being dissatisfied with the company’s stock price performance,” wrote the company. Ackerman In a letter to the Howard Hughes Board of Directors.
Ackman proposed forming a new subsidiary of Pershing, which currently owns about 38% of Howard Hughes, that would merge with the real estate developer based in The Woodlands, Texas.
“Shareholders have the option to receive the majority of the merger consideration in cash at a price of $85.00 per share, which represents a 38.3% premium to the unaffected share price and an 18.4% premium to Friday’s closing price, and the remaining balance in stock of the combined company,” the letter said.
Affected by this news, Howard Hughes shares rose 11% to $79.67 per share in pre-market trading. CNBC is reaching out to the company for comment.
Pershing first invested in Howard Hughes in November 2010, issuing $250 million at a rights issue price of $47.62 per share. Over the past 14 years, Pershing’s investments have generated a total return of 35%, a compound annual return of just 2.2%, Ackman said. The company has also paid zero dividends since its inception, he added.
“The company’s share price performance is obviously extremely disappointing, especially given the high regard we have for the board and the company’s exceptional management team, led by David O’Reilly, and the nearly a thousand employees who work at Howard Hughes, many of whom I worked with at Howard Hughes. This has come to be understood over the past decade or so,” Ackman wrote in the letter.
Under the proposed deal, Ackman said Howard Hughes would remain unchanged and continue to be managed by its current leadership team led by Chief Executive David O’Reilly.
“We do not plan to make any changes to the HHC organization, employees or its long-term strategy,” Ackman said. “We expect that all current HHH employees will remain employed as a result of this transaction.”
