General Growth surges after Ackman pushes sale

Bill Ackman
Bill Ackman

General Growth Properties rose the most in a year after investor Bill Ackman urged the mall owner to consider a sale, saying the company's largest rival and biggest shareholder have both expressed interest in a takeover.

Mr. Ackman's Pershing Square Capital Management, General Growth's No. 2 shareholder, has discussed a takeover of the Chicago-based company with Simon Property Group, according to a letter Mr. Ackman filed Thursday with the Securities and Exchange Commission. Brookfield Asset Management, General Growth's largest investor, didn't support the deal and said it might pursue an acquisition on its own, according to the letter.

“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,” Mr. Ackman said in the letter. Brookfield should be stopped from “unfairly acquiring control” of General Growth without paying a “premium in a competitively negotiated transaction,” he wrote.

General Growth exited bankruptcy protection in November 2010 following a takeover battle between Indianapolis-based Simon Property, its larger competitor, and an investor group that included Brookfield and Pershing Square. General Growth filed for bankruptcy in 2009 after weighing itself down with $27 billion in debt that it was unable to refinance because of the financial crisis and collapse of the commercial mortgage-backed securities market.

General Growth climbed 9.7% to $20.32 per share at the close of New York trading. It was the stock's biggest gain since Aug. 9, 2011, and its highest price in almost four years.

Pershing Square and Simon Property discussed a deal in which Simon would acquire its competitor for 0.1765 of a Simon share for each General Growth share. Were that ratio used with Simon's closing stock price Wednesday, General Growth would be valued around $28 a share.

David Keating, a General Growth spokesman; Andrew Willis, a spokesman for Toronto-based Brookfield; and Les Morris, a Simon Property spokesman, declined to comment on Mr. Ackman's letter. Mr. Ackman didn't immediately respond to a request for comment.

Simon has been “effectively handcuffed and gagged” from pursuing a deal because of Brookfield's influence over General Growth, Mr. Ackman wrote in his letter to General Growth's board. Brookfield has gone from owning 29% of the mall owner to 42.2% through shares and warrants, Mr. Ackman said.

“To be clear, we are not accusing Brookfield or the company of wrongdoing in connection with the company's potential sale,” Mr. Ackman wrote. “However, once Brookfield indicated that it was interested in acquiring the company, its interests diverged with those of other GGP shareholders.”