Bill Ackman, CEO of Pershing Square Capital Management, speaks at the Delivery Alpha conference in New York City on September 28, 2023.
Adam Jeffrey | CNBC
Bill Ackman's Pershing Square is offering to take over the rest of the area Howard Hughes Holdings The investment company does not have $85 per share.
“While we are pleased with the significant progress Howard Hughes Holdings has made over the more than 14 years since going public, we, like other long-term shareholders and this board, are dissatisfied with the performance of the company's stock prices.” Ackman 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, which would merge with the real estate developer based in The Woodlands, Texas.
“Shareholders will have the option to acquire more than a majority consideration for the merger in cash at a price of $85.00 per share – representing a 38.3% premium over the unaffected share price and an 18.4% premium over last Friday's closing price – and an 18.4% premium over Friday's closing price. The letter stated, “Equilibrium in the stock of a post-merger company.”
Shares of Howard Hughes jumped 11% to $79.67 a share in premarket trading on the news. CNBC has been reaching out to the company for comment.
Pershing first invested in Howard Hughes in November 2010 in a $250 million rights offering at $47.62 per share. Over the past 14 years, Pershing's investment has generated a total return of 35%, or a compound annual return of just 2.2%, Ackman said. He added that the company has not paid any dividends since its founding.
“Clearly, the company's share price performance is very disappointing, particularly in light of the high regard in which we hold this board and the company's fantastic management team led by David O'Reilly and the nearly 1,000 Howard Hughes employees, many of whom I have come to know over the past decade. Ackman wrote in the letter.
Under the proposed deal, Ackman said Howard Hughes will remain unchanged and will continue to be managed by the current leadership team led by CEO David O'Reilly.
“We do not intend to make any changes to HHC’s organization, its employees, or its long-term strategy,” Ackman said. “We expect all current employees at HHH to remain employed as a result of this transaction.”
