Howard Hughes Rejects Ackman’s Latest Takeover Plan But Leaves Door Open To Buyout
The board of directors at Howard Hughes Holdings rejected Bill Ackman’s latest takeover bid — but left the door open for a potential merger.
Ackman’s proposal to pay $90 per share for 10 million new shares of HHH is “not acceptable in its current form,” the firm’s board said in a statement Monday. But the deal isn’t dead, with both sides agreeing to enter a standstill agreement until March 13 “to facilitate further discussions to explore potential alternatives.”
Ackman, the CEO of Pershing Square Capital Management and HHH’s largest shareholder, first began plotting to take the firm private in an August regulatory filing in which he said his hedge fund was considering acquiring the firm, potentially with other investment partners.
Pershing Square owns 37.6% of HHH, and the most recent proposal would have pushed that up to a 48% stake, installed Ackman as chairman and CEO, and integrated the master-planned development firm into Pershing Square's corporate structure while operating independently.
The $90 per-share offer is a significant premium on HHH stock, which has largely traded between $70 and $80 per share for most of the last six months. It is also a higher share price than the $85 per share Ackman offered in January for 11.8 million existing HHH shares.
HHH executives said the negotiations were ongoing and no deal had been made. The firm's stock was flat in early trading Monday.
“There can be no assurance that the foregoing will result in any particular outcome, and HHH does not intend to comment further on these matters until HHH determines that additional disclosure is appropriate or required by law,” the company’s statement says.
Ackman helped create what is now HHH in 2010, when Howard Hughes Corp. was spun off from shopping mall REIT General Growth Properties. In 2008, Ackman became that firm’s largest shareholder, and the activist investor served as chairman of the newly created Howard Hughes Corp. until he stepped down in April 2024.
Howard Hughes Corp. shifted its corporate structure in July 2023, becoming HHH. The new holding company allowed the firm to separate its real estate assets across multiple entities, giving it more funding flexibility and reducing the risk exposure of its master-planned developments to each other’s performance.
Ackman has pitched his takeover plan as a bid to create the next Berkshire Hathaway, Warren Buffett’s storied investment firm.
“With apologies to Mr. Buffett, HHH would become a modern-day Berkshire Hathaway that would acquire controlling interests in operating companies,” Ackman wrote in a January letter to the HHH board.
Ackman told board members that he was disappointed that Howard Hughes’ stock value hadn't gone up in line with what he sees as the company’s successful 14-year record of developing and operating master-planned communities. He wants to take the profits from those operations to fund acquisitions and boost HHH’s own offerings.
“HHC is on the path to soon begin to generate substantial excess cash resources above and beyond investments in new property developments and amenities,” Ackman said in the letter.
