Ack is selling warrants for 18.4 million shares to BAM and announces that he no longer supports a sale of GGP and will become a passive investor. (Always suspected he would make a deal with BAM just as Berkie did)
Dabs - Sounds like the beginning of the end of the Ackman era at GGP.
He made us all more wealthy because of his presence.
But he loves the limelight and with GGP becoming a stable operating entity it is just too boring for him.
He much prefers the drama of JC Penney and Herbalife.
General Growth Properties Inc. (GGP) may move after Pershing Square Capital Management LP, its second-largest shareholder, gave up its demand for the sale of the company. GGP’s biggest investor, Brookfield Asset Management Inc., will buy warrants for 18.4 million shares of the second-biggest U.S. mall owner from Pershing, according to a statement today.
Dabqs, my friend , Happy New Year
As we discussed several months ago, Ack found a way to cut a deal with BAM.
He really had no choice once David S abandoned him.
So he sells his warrants, backs off his activist role and agrees to be a good little passive shareholder..
I look for another annoucement down the road where he begins to sell his shares.
This stock has gotten way to boring for him.
He has moved on to a long position on JCP where he can take on his fellow titans in JCP, one of the most shorted stock in the DJI.
He is also going to war with Herbalife, where I think some of his comments could find him in a lawsuit.
Today is a good day, and as you said in one of your posts, we shake out the weak hands today and those looking for a quick buck from a none-existant take over.
I think BAM will keep the GGP team focused and we will see some good results in 2013.
Given today's announcement, I agree largely with most of your post. A potential deal is certainly on the back burner at this point. Ack locked in the possibility for it at some point in the future though by having BAM agree to limit its maximum voting stake. As Simon had no appetite at this point, he would have to develop the taste four years down the line it would seem, as he would very much need Ack in his corner agitating supremely as the activist Ack is.
Unless, of course, BAM would seek a friendly deal, but I don't see that happening.
As a hedge fund sucks in its grotesquely fat fees by attempting to deliver alpha (and the vast majority do NOT deliver), GGP would need to be perceived by Ack as having market beating potential on its own merits to continue to own--which I believe it does--as do I believe Ack does as well. Yet, as you know, a hedge fund will always weigh what it feels its best opportunities are and allocate its cash accordingly. It will be interesting to see what Ack decides to do. In any event, I do not see him changing his position in the short run, but potentially he may very well do it at some point. And if and when he does, he would do it gradually, as to not pressure the GGP stock price on himself.
What Ack could do with his warrants he will not do with his shares for the reasons I have expounded on previously. Those (warrants/common stock) are two distinctly different animals. Further, that BAM has him locked into a 4 year standstill, what would be their incentive to pay a premium to him? None.
While not wholly correct, your call was largely on the mark. Tip of the cap to you!
Ack obtained a limit on Brookfield's voting percentage of GGP. In exchange, Ack raised cash by selling warrants to Brookfield which should boost Brookfield's ownership stake to about 40% of GGP. This leaves open the possibility of a deal at some point should Simon find the appetite. However, as Ack also agreed to leave GGP alone in terms of a potential transaction for four years, this puts any such deal on the back burner.
We will have to see what Ack does going forward with his shares of GGP.
GGP share price can still appreciate nicely, and likely solidly better than peers--by sticking to their fundamental growth story, as you noted. The growth story for GGP is simply better than most peers because GGP is still playing catch up after the BK. They will continue to improve operations which will result in better-than-peers FFO per share growth.
Today we see the sizzle provided by the heretofore prospect of Ack going activist on GGP being removed from the share price. After today's selling by the short term buyout speculators, the fundamental (growth/dividend) buyers will step in and thereafter the share price going forward will move with the market, its retail REIT sector, and the successful implementation of GGP's growth plan.