Bill Ackman, CEO of Pershing Square Capital Management, speaks at the Delivering Alpha conference in New York on September 28, 2023.
Adam Jeffrey | CNBC
Bill Ackman’s Pershing Square is forming a new entity to merge howard hughes holdingsoffering $85 per share to the real estate company’s current holders.
“While we are pleased with the significant business progress that Howard Hughes Holdings has made in the more than 14 years since we went public, like other long-term shareholders and the Board of Directors, we remain dissatisfied with the company’s stock price performance. “There is,” he wrote. Mr. Ackman said in a letter to the Howard Hughes Board of Directors.
Mr. Ackman proposed creating a new subsidiary of Pershing, which currently owns about 38% of Howard Hughes, and merging it with the Woodlands, Texas-based real estate development company.
“Shareholders will receive more than the majority of the merger consideration in cash at $85.00 per share, representing a 38.3% premium to the unaffected stock price and an 18.4% premium to last Friday’s closing price. “corresponding to the outstanding balance of the company after the merger,” the letter said.
Howard Hughes stock rose 10% to $78.95 per share on Monday on the news. CNBC has reached out to the company for comment.
Mr. Pershing first invested in Howard Hughes in November 2010 with a $250 million stock allocation at $47.62 per share. Over the past 14 years, Pershing’s investments have had a total return of 35% and a compound annual return of just 2.2%, Ackman said. The company has not paid a dividend since its inception, he added.
“Our share price performance is clearly very disappointing, especially given the high regard we have for this board and our outstanding management team led by David O’Reilly and the approximately 1,000 employees who work at Howard Hughes. I have known him for over 10 years,” Ackman wrote in the letter.
Ackman said that under the proposed deal, Howard Hughes would remain unchanged and would continue to be managed by its current management team, led by CEO David O’Reilly.
“We do not intend to make any changes to HHC’s organization, employees or long-term strategy,” Ackman said. “We expect all of HHH’s current employees to remain employed as a result of this transaction.”
