This article is from the Australian Property Journal archive
TWO days after he was knighted in London, Sir Frank Lowy has sold Westfield Corporation to French property giant Unibail-Rodamco for a record US$24.7 billion (approx AU$32.75 billion), creating a flagship global shopping centre group which boasts 1.2 billion visitors annually.
It is a matter of second time lucky for Unibail-Rodamco, which previously made a similar move for its rival but was rebuffed by Westfield.
Under the terms of the agreement, Westfield securityholders will receive a combination of cash and shares in Unibail-Rodamco, valuing each Westfield security at a price of US$7.55 (A$10.01), representing a premium of 17.8% to Westfield’s closing security price on December 11, 2017.
The deal will create a global property leader with €61.1 billion (US$72.2 billion) of Gross Market Value (GMV) with a pro forma market capitalisation of €31.1 billion, a pro forma proportionate net rental income of €2.3 billion (US$2.6 billion) for the 12 months to June 30 2017. The beefed up Unibail-Rodamco will own 104 assets in 13 countries, of which 56 are in the United States, attracting 1.2 billion visits annually.
The portfolio will have an average GMV per shopping centre of €599 million (€942 million for the flagship portfolio), significantly ahead of all other large shopping centre REITs.
The group will also have the world’s largest development pipeline of €12.3 billion.
Unibail-Rodamco expects the combined company will generate run-rate synergies of €100 million per annum.
Upon completion, Unibail-Rodamco stapled securities will be listed on Euronext Amsterdam and Paris. Unibail-Rodamco will also establish a secondary listing on the ASX to allow former Westfield securityholders to trade Unibail-Rodamco stapled securities locally in the form of Chess Depositary Interest (CDI).
“We are delighted to announce this transaction today,” Unibail-Rodamco CEO Christophe Cuvillier said.
“All of us at Unibail-Rodamco have immense respect for what the Lowy family and the Westfield team have accomplished with the Westfield brand and the company’s iconic collection of world class shopping destinations. The acquisition of Westfield is a natural extension of Unibail-Rodamco’s strategy of concentration, differentiation and innovation.
“It adds a number of new attractive retail markets in London and the wealthiest catchment areas in the United States,” he added.
“We believe that this transaction represents a compelling opportunity for both companies to realize benefits not available to each company on a standalone basis, and creates a strong and attractive platform for future growth,” he continued.
Sir Lowy said the transaction is a culmination of the strategic journey Westfield has been on since its 2014 restructure.
“We see this transaction as highly compelling for Westfield’s securityholders and Unibail-Rodamco’s shareholders alike.
“Unibail-Rodamco’s track record makes it the natural home for the legacy of Westfield’s brand and business. We look forward to seeing Westfield continue to grow as part of the world’s premier owner of flagship shopping destinations.” Sir Lowy said.
The Lowy family has entered into a voting agreement under which it has agreed not to sell its interest in Westfield during the period of the transaction, and to vote in favour of the transaction in the absence of the Westfield board recommending a superior proposal and subject to an independent expert report.
In addition, Unibail-Rodamco holds a 4.9% economic interest in Westfield securities.
Meanwhile it is proposed that a 90% interest in OneMarket (formerly Westfield Retail Solutions), Westfield’s retail technology platform, will be spun-off from Westfield into a newly formed ASX listed entity.
The group will retain the remaining 10% interest in OneMarket. OneMarket will have approximately US$200 million in cash at December 31, 2017. Steven Lowy will chair the OneMarket Board and Don Kingsborough will be its CEO.
Deutsche Bank and Goldman Sachs have provided a €6.1 billion committed acquisition financing facility to cover the cash portion of the offer, refinancing requirements at Westfield and Unibail-Rodamco and transaction costs. The bridge facility is expected to be repaid with a combination of senior debt and deeply subordinated hybrid securities (€2 billion). Pursuant to its ongoing portfolio review, Unibail-Rodamco has earmarked an amount of approximately €3 billion of assets to be disposed over the next several years.
Australian Property Journal
