Billionaire investor Bill Ackman's Pershing Square made a bid to merge with Howard Hughes Holdings in a move to transform the real estate firm that owns large master-planned communities around the country into a "modern day Berkshire Hathaway."
Pershing Square plans to form a new entity for the deal that offers $85 per share, representing 18.4% more than Howard Hughes' closing price last Friday, according to a Monday letter penned by Ackman to Howard Hughes' board.
"While pleased with the substantial business progress Howard Hughes Holdings has made over the more than 14 years since it went public, we, like other long-term shareholders and this board, have been displeased with the company’s stock price," wrote Ackman, CEO of the New York City-based investment holding company Pershing Square.
Pershing Square owns nearly 38% of Howard Hughes through various funds. Pershing Square considered taking the company private in August 2024. Now Ackman is proposing for a newly formed Pershing Square subsidiary to merge with Howard Hughes Holdings and to acquire controlling interests in operating companies, much like Warren Buffett's Berkshire Hathaway. Pershing Square's offer for $85 per share this week represents a premium of 38.3% to Howard Hughes' stock price from August.
Howard Hughes confirmed receipt Monday of the unsolicited acquisition proposal, which officials said will undergo review by the firm's special committee of independent directors. No exact timing was given, but the proposal is subject to the negotiation and execution of an agreement if the committee believes this to be the best course of action for company.
Howard Hughes owns high-end master-planned developments in the greater Houston area, including in The Woodlands where it also has its headquarters, as well as Summerlin in Las Vegas and Ward Village in Honolulu. Each master-planned project, some of which rank among the nation's top-selling developments, has millions of square feet of office and retail real estate, plus thousands of apartments and single-family homes. In August, the company completed the spin off of Seaport Entertainment Group.
The proposed merger is expected to cost Pershing Square $1 billion, which Ackman said the company has on its balance sheets. Pershing Square reported it has received a letter from its financial adviser Jefferies LLC indicating a high confidence in raising $500 million in bonds for the proposed deal.
Based on feedback from stakeholders, Ackman said there's been interest from long-term investors alongside Pershing Square to become a larger permanent owner of Howard Hughes and create a "highly attractive cash alternative to shareholders who choose to exit," as well as accommodating shareholders who want to invest for the long term.
If the merger is accepted, Ackman said, Pershing Square and other investors would commit to keep Howard Hughes as a public company, with Pershing Square owning less than 50% of Howard Hughes Holdings. The senior leadership roles at Howard Hughes Holdings — and not its real estate arm, Howard Hughes Corp. — would comprise leadership from Pershing Square Holdco, including Ackman as chairman and CEO, Ryan Israel as chief investment officer, Ben Hakim as president, Mike Gonnella as chief financial officer and Halit Coussin as chief legal officer.
Howard Hughes' leadership would remain unchanged and be led by CEO David O'Reilly. Pershing Square would share its capital-raising capabilities, as well as systems like technology, finance, accounting, administrative and office space with Howard Hughes.
Howard Hughes Holdings' stock closed Monday up nearly $7 to $78.62 per share.