With his attentions now focused elsewhere, Bill Ackman has no time to make three-hour presentations about why Canadian mall owner General Growth Properties should be sold, post-haste. Also: The company he wanted to buy GGP* didn't want it anymore. So he's picking up his toys and going home.
The New York-based activist hedge fund has agreed to go passive, part of deal that saw it sell warrants to buy more than 18 million GGP shares to Brookfield Asset Management, GGP's largest shareholder and Pershing Square's one-time ally turned rival. Brookfield paid about $271.9 million for the warrants, which grant the right to buy GGP shares at less than half their current value.
Pershing Square also agreed to keep its stake below 10% for at least for years, and rescinded its call for GGP to explore a sale. In return, Brookfield, which led a reorganization of GGP with Pershing Square's backing in 2010, has agreed to ownership limits; in addition to seeking a sale, Pershing Square had warned against Brookfield's taking "de facto" control over GGP.
With Brookfield's control over GGP growing and Simon out of the bidding, Ackman got himself a pretty good deal. Brookfield is paying about $15 per warrant, allowing it to buy the GGP shares for less than $10. GGP is currently trading over $20. All told, Pershing Square made about a 77-fold return on its GGP investment.
Pershing Square, Brookfield Strike Deal Over Mall Co. [FINalternatives]
Ackman drops push for sale of mall operator [Reuters Canada]
Brookfield, Ackman resolve General Growth dispute [Globe and Mail]
Ackman Reaches Deal to Drop Call for General Growth Sale [Bloomberg]
*Funny story: The company in question, Simon Property Group, wanted very much to buy GGP in 2010. Pershing Square was not as interested in having SPG buy GGP then. So it helped Brookfield lead a reorganization, before its falling-out with said Brookfield.