On Thursday, Howard Hughes Holdings Inc. officially confirmed that it has received a buyout offer from Pershing Square Capital Management LP, led by billionaire investor Bill Ackman. The proposal involves taking the real estate company private by acquiring the approximately 62.5% of its shares that Pershing Square does not currently own.
Howard Hughes Holdings, headquartered in Texas, was named after the legendary billionaire Howard Hughes. The company, which focuses on real estate development and management, has seen its stock price fluctuate significantly. Following the announcement of the buyout offer, the company’s shares increased by 1.2% in premarket trading. Despite this positive movement, Howard Hughes Holdings’ stock has experienced a notable decline of 18.7% so far in 2024, contrasting with a 9% rise in the S&P 500 index during the same period.
The specific terms of the buyout offer, including the proposed price per share, were not disclosed by either Howard Hughes Holdings or Pershing Square. In response to the offer, Howard Hughes Holdings stated that it is forming a special committee to review the proposal and explore various strategic alternatives. This includes assessing whether to remain a public company or to proceed with the privatization option. The special committee will evaluate the offer’s merits and consider other potential strategic moves that could be in the best interest of the company and its shareholders.
Pershing Square Capital Management, under the leadership of Bill Ackman, has enlisted the investment bank Jefferies to provide advisory services on the potential transaction. This move is part of Ackman’s broader strategy, which recently saw a significant shift. Ackman’s firm had initially planned an initial public offering (IPO) for Pershing Square USA Ltd., targeting a substantial $25 billion in capital raise. However, the IPO’s projected size was subsequently reduced to $2 billion before being canceled altogether.
Howard Hughes Holdings was established through a spin-off from the bankrupt General Growth Properties in 2009. Since its inception, the company has been involved in a range of real estate projects and developments. Recently, Howard Hughes Holdings spun off its Las Vegas Aviators baseball franchise and the South Street Seaport in New York City into a separate entertainment business, marking a strategic shift towards focusing on core real estate assets.
The proposed buyout by Pershing Square comes at a time when the real estate market is facing various challenges, and Howard Hughes Holdings is exploring ways to enhance shareholder value and streamline its operations. The decision to take the company private could offer a pathway to address these challenges more effectively and capitalize on opportunities in the real estate sector.