Mall Co. Rejects Pershing Square Sale Push

Sep 11 2012 | 12:25pm ET

Pershing Square Capital Management finds itself at loggerheads with one of its larger portfolio holdings, after mall operator General Growth Properties roundly rejected the hedge fund's demand that it consider a sale.

The activist hedge fund may have to get more active after the General Growth board "unanimously determined that the best value for all shareholders will by achieved by GGP continuing to execute on its well-conceived business plan." The board was backed by Brookfield Asset Management, which led General Growth's reorganization alongside Pershing Square and which now owns 42.2% of the company.

Pershing Square last month called on General Growth to appoint a special committee to explore a sale, pointing out that Simon Property Group, the largest mall operator in the U.S., could offer a large premium to acquire General Growth. The hedge fund has also warned against allowing Brookfield to take "de facto" control over General Growth without paying a premium; Brookfield has denied that it has any such intentions and its stake is capped at 45%, according to regulator filings.

"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," Brookfield CEO Bruce Flatt told shareholders yesterday. "This does not mean we should never sell."

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