Pershing Square, Brookfield Strike Deal Over Mall Co.

Jan 3 2013 | 11:18am ET

Pershing Square Capital Management is ending its fight over mall owner General Growth Properties.

The New York-based activist hedge fund has agreed to go passive, part of deal that saw it sell warrants to buy more than 18 million GGP shares to Brookfield Asset Management, GGP's largest shareholder and Pershing Square's one-time ally turned rival. Brookfield paid about $271.9 million for the warrants, which grant the right to buy GGP shares at less than half their current value.

Pershing Square also agreed to keep its stake below 10% for at least four years, and rescinded its call for GGP to explore a sale. In return, Brookfield, which led a reorganization of GGP with Pershing Square's backing in 2010, has agreed to ownership limits; in addition to seeking a sale, Pershing Square had warned against Brookfield's taking "de facto" control over GGP.

Brookfield owns more than 40% of GGP's shares, but has agreed to a 45% cap and to limit its right to vote shares in excess of 38.2% of GGP's common stock.

Pershing Square, GGP's second-largest shareholder, owns about 8% of the company's shares. The hedge fund said it was satisfied with GGP's board.


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