Bill Ackman Reaches $900M Deal With Howard Hughes After Stalled Takeover Bid

After a monthslong courtship, billionaire investor Bill Ackman wasn’t able to convince the board at Howard Hughes Holdings to sell the firm. But they have reached a nearly billion-dollar deal.

Ackman’s Pershing Square Capital Management will pay $900M for 9 million newly issued shares of HHH — a 48% premium on the stock’s closing price Friday — to boost its stake in the master-planned community developer to 46.9%.

The deal is $10 a share higher and gives Pershing control over 1 million fewer shares than Ackman’s last offer.

The capital infusion will seed the expansion of HHH’s business lines beyond development and into investment, according to a release Monday. HHH will look to buy controlling stakes in public and private operating companies with strong growth potential while continuing its real estate development business.

Pershing Square has agreed to limit its voting power to 40% and its beneficial ownership stake to 47%. The cash infusion is being made by Pershing Square Holdco, which is 90% owned by Pershing Square principals, with the remaining shares held by strategic investors. 

Ackman, who helped stand up HHH with Brookfield Asset Management after the near collapse of its parent company in 2010, will join the board as executive chairman. Pershing Square Chief Investment Officer Ryan Israel will join HHH in the same role. 

The rest of the HHH leadership team, including CEO David O’Reilly, will remain in place but see their roles expanded. 

The deal gives Pershing Square the right to nominate three members to the board of directors. 

Ackman replaces Scot Sellers as chairman of the HHH board, although Sellers will remain a board member. Israel and Jean-Baptiste Wautier, director at Pershing Square Holdings, will also join the board, replacing Adam Flatto, Dana Hamilton and Allen Model. 

HHH stock was up more than 3% in early trading Monday as the major indexes started the week trading slightly in the red. The firm will report first-quarter earnings after markets close Wednesday, with an earnings call set for Thursday morning.

“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,” Ackman said in a statement.

The activist investor has been HHH’s largest shareholder since 2008 and served as chairman until last April of Howard Hughes Corp., the entity created in July 2023 that shifted the corporate structure of the developer and put its projects under separate holding companies.  

Ackman first publicly expressed interest in taking HHH private in August. Pershing Square owned 37% of the company, and the investment manager said in a regulatory filing that it was considering acquiring all of the company’s shares. 

He floated a merger plan in January and was rebuffed again in March when he offered $90 per share for 10 million newly created stock.

HHH will pay Pershing Square a quarterly $3.75M base fee and an additional management fee. 

“We believe this agreement not only reflects the value that HHH has created in recent years, but it also positions the Company to transform its strategy, with enhanced value creation opportunities and upside potential, while improving its credit profile,” Sellers, chairman of the special committee established by HHH to consider the offers, said in a statement.