Billionaire hedge fund manager Bill Ackman (Trades, Portfolio), through Pershing Square, has proposed a merger with real estate developer Howard Hughes (HHH, Financial) at $85 per share. The offer to Howard Hughes shareholders includes a significant cash component, with the remaining balance to be paid in stock of the merged entity. The cash offer represents an 18.4% premium over the last closing price.
Shareholders of Howard Hughes have the option to receive the merger consideration at $85 per share or to reinvest all or part of their shares into the new company. The cash and stock options are subject to a certain ratio to ensure that the company maintains at least 13.6 million publicly traded shares, representing 30.8% of the issued and outstanding equity.
Post-transaction, Pershing Square and its affiliates are expected to own between 61.1% and 69.2% of the company, depending on the extent of cash conversion by public shareholders. As of last August, Pershing Square was the largest shareholder of Howard Hughes, holding a 37.5% stake.
The proposal indicates that all current employees of Howard Hughes are expected to remain with the company after the merger. Pershing Square intends to make its investment in Howard Hughes a permanent holding, signaling a long-term commitment to the company.
