Pershing Square Poised For Big Payday On Malls Bet

Mar 1 2010 | 3:35am ET

In the matter of mall owner General Growth Properties, it seems that Pershing Square Capital Management can’t lose.

The New York-based activist hedge fund shop helmed by William Ackman owns a 6.4% stake in the bankrupt company, having paid an average of 46 cents for each of its 20.1 million shares. Pershing Square is backing a proposal that would split the U.S.’s second-largest mall owner in two that values each existing General Growth share at $15, with would be a $292 million profit for the hedge fund.

A competing offer from Simon Property Group, the largest mall operator in the country, would earn Pershing Square a $170 million profit. Simon, of course, could make a richer offer.

And another potential bidder, Australia’s Westfield Group, has signed a non-disclosure agreement with General Growth as it mulls an offer, Bloomberg News reports.

Simon has dismissed the new plan—backed by a $2.63 billion investment from Brookfield Asset Management—as “a risky equity play.” Under the proposal, General Growth shareholders would get a new General Growth share, initially valued at $10 apiece, and a share of General Growth Opportunities, valued at $5 each.


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