General Growth shares soar on investor letter
NEW YORK (AP) — Shares of General Growth Properties Inc. jumped to a new high Thursday, after one of its largest shareholders urged the shopping mall operator's board to consider a possible sale of the company before one of its rivals acquires enough shares to take control of it.
THE SPARK: In a letter to General Growth's board, William Ackman of Pershing Square Capital Management said he is concerned that Brookfield Asset Management will soon acquire enough General Growth shares to take over the company, without paying its other shareholders a fair price.
In order to prevent that, Ackman said that General Growth's board should form a committee to consider selling the company and help its stakeholders get a fair price for their shares.
THE BIG PICTURE: General Growth filed the largest real estate bankruptcy case in U.S. history in 2009 under the burden of nearly $28 billion in debt. It exited bankruptcy with the aid of $6.8 billion in equity commitments from an investor group led by Brookfield. It also worked out a way to pay all creditors in full — a rare outcome in bankruptcy cases.
Brookfield now own a roughly 42 percent stake in the company, up from 29 percent when General Growth emerged from Chapter 11 bankruptcy protection in 2010. In comparison, Pershing owns about 10.2 percent of General Growth.
The company has other suitors as well. Indianapolis-based Simon Property Group Inc. tried to acquire General Growth while it was under court supervision, and also made a bid to buy it last year.
"Our goals are to ensure that a level playing field exists so that Simon, Brookfield and potentially other parties can compete to acquire the company, and that appropriate measures are taken to prevent Brookfield from unfairly acquiring control of General Growth without paying an appropriate control premium in a competitively negotiated transaction," Ackman said in his letter.
A spokesman for General Growth declined comment on the letter.
THE SHARES: Up $1.78, or 9.6 percent, to $20.30 in late afternoon trading, after peaking at $21.12 earlier in the day and passing its previous 52-week high of $18.97. The jump marked the stock's highest price since the company emerged from bankruptcy protection.