What we know
The announcement comes nearly four months after Pershing Square CEO Bill Ackman proposed an official merger with Howard Hughes Holding, Inc., in what Ackman said was an effort to “diversify” the company’s stock portfolio.
Howard Hughes is the developer of a number of master-planned communities across the Houston region, including The Woodlands, Bridgeland and The Woodlands Hills.
“This transaction is the result of a rigorous process overseen by HHH’s Special Committee, which included evaluation of each of Pershing Square’s proposals, feedback from HHH stockholders and robust negotiations with Pershing Square’s principals to reach a mutually favorable outcome,” said Scot Sellers, chairman of the special committee, which began reviewing the Pershing Square offer in January.
Under the agreement, Ackman will also rejoin the HHH board of directors as executive chairman and is bringing Pershing Square's Chief Investment Officer Ryan Israel to work in the same position at HHH.
“HHH has built substantial value for shareholders in recent years that has largely gone unrecognized due to the high cost of capital that the market assigns to the company in light of its pure-play exposure to real estate development and community creation,” Ackman said in the release. “We believe that HHH is a superb platform to build a faster-growing, high-returning holding company that will acquire control of companies that meet Pershing Square’s criteria for business quality and durable growth. We are looking forward to working with David [O’Reilly, CEO of HHH] and the rest of the HHH team in creating long-term value.”
Diving in deeper
According to the release, development of Howard Hughes’ properties will continue without interruption; however, the company will also look to new development opportunities.
“HHC’s award-winning assets, consistently outstanding operations and cash generation potential will serve as the foundation of a tremendous new value creation strategy,” O’Reilly said. “Pershing Square’s investment will create new avenues for growth, while our core business as the nation’s leading community builder will not change. We remain steadfast in our commitment to creating exceptional communities, pursuing innovative development opportunities and acting nimbly to meet market demand and deliver sustainable growth. As we seamlessly expand our priorities, we welcome Bill and Ryan, and the support and resources of Pershing Square.”
