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Bill Ackman backs off GGP

by Lou Whiteman  |  Published January 3, 2013 at 10:54 AM
Bill Ackman's Pershing Square Capital Management LP is easing the pressure on General Growth Properties Inc., reaching a deal with General Growth's largest shareholder and backing off pushing for a sale of the second-largest U.S. mall owner.

Pershing in August had urged the Chicago-based REIT to consider a sale, saying that larger rival Simon Property Group Inc. was interested in buying the company. Pershing at the time was General Growth's second-largest shareholder, with a 10.5% stake.

Nothing came of that deal idea, but Ackman in October accused General Growth's largest shareholder, Brookfield Asset Management Inc., of trying to unduly influence the REIT. Pershing Square in a regulatory filing confirmed that Simon Property was not interested in a transaction, and said it had made peace with Brookfield.

Officials with Indianapolis-based Simon Property had said in September they had no interest in doing a deal with General Growth, which owns and manages 126 regional malls in the U.S. and 18 malls in Brazil totaling about 135 million square feet.

As part of the settlement, Brookfield's full voting rights in General Growth is capped at 38.2% for the next four years, and Pershing's 8% stake will change from active to passive. Pershing also sold General Growth warrants for 18.4 million shares of GGP stock to Brookfield for $271.9 million.

Toronto-based Brookfield has held a large stake in General Growth since 2010, when the firm outbid Simon Property to buy the retail REIT out of bankruptcy. The stake is held through Brookfield Retail Holdings LLC.

Brookfield CEO J. Bruce Flatt has spoken out publicly against a General Growth sale, saying in a letter to GGP shareholders that it was too soon to do a deal and pledging that "the premium which could be realized at a future date will, in all likelihood, be far more significant than what would be achieved in a sale today."

Shares of General Growth opened down 3.79%, or 76 cents, at $19.29, on Thursday morning.

Kirkland & Ellis LLP advised Pershing Square on the sale of GGP Warrants to Brookfield Asset Management.

Willkie Farr & Gallagher LLP's Gregory Astrachan and Henry Cohn represented Brookfield Asset Management.

Tags: Bill Ackman | Brookfield Asset Management Inc. | General Growth Properties Inc. | J. Bruce Flatt | Kirkland & Ellis LLP | Pershing Square Capital Management LP | REIT | Simon Property Group Inc. | Willkie Farr & Gallagher LLP

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