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 offering to pick up the rest Howard Hughes Holdings the investment firm does not own for $85 per share.
“While we are pleased with the significant business progress that Howard Hughes Holdings has made in the more than 14 years since it went public, we, like other longtime shareholders and this board, have been dissatisfied with the performance of the Company’s stock price,” he wrote. Ackman in a letter to the board of Howard Hughes.
Ackman has proposed a new subsidiary of Pershing, which currently owns about 38% of Howard Hughes, to merge with the real estate developer based in The Woodlands, Texas.
“Shareholders would have the option to receive more than most of the merger consideration in cash at $85.00 per share – representing a 38.3% premium to the unchanged share price and an 18.4% premium to last Friday’s closing price – and the balance stock of the company after the merger,” the letter said.
Shares of Howard Hughes jumped 11% to $79.67 a share in premarket trading on the news. CNBC has reached out to the company for comment.
Pershing first invested in Howard Hughes in November 2010 in a rights offering for $250 million at $47.62 per share. Over the past 14 years, Pershing’s investment has generated a 35% total return, or just a 2.2% compound annual return, Ackman said. The company has also paid zero dividends since its inception, he added.
“The performance of the Company’s share price is clearly extremely disappointing, particularly in light of the great respect we have for this Board and the Company’s excellent management team led by David O’Reilly and the nearly one thousand employees working at Howard Hughes, many of whom I have come to know over the last over decade,” Ackman wrote in the letter.
Under the proposed deal, Ackman said Howard Hughes would remain unchanged and would continue to be run 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 would expect all current employees of HHH to remain employed as a result of the Transaction.”
