Bill Ackman, CEO of Pershing Square Capital Management, speaks during an interview for an episode of “The David Rubenstein Show: Peer-to-Peer Conversations,” in New York on Nov. 28, 2023.
Jeenah Moon | Bloomberg | Getty Images
Pershing Square’s Bill Ackman hiked his takeover offer for Howard Hughes Holdings to create a “modern-day” Berkshire Hathaway.
The billionaire investor said Tuesday that his firm has submitted a proposal to acquire 10 million newly issued Howard Hughes shares at $90 per share. Back in January, Ackman proposed forming a new subsidiary of Pershing to merge with Howard Hughes, offering current holders $85 a share.
If the newly proposed transaction goes through, Pershing Square will own 48% of the real estate developer based in The Woodlands, Texas. The revised transaction does not require regulatory approvals, a shareholder vote or financing, so can be completed in a few weeks.
Shares of Howard Hughes fell nearly 5% in extended trading following the news. The stock had closed up 6.8% at $80.60 in anticipation of the announcement.
Ackman will become chairman and CEO of Howard Hughes if the deal comes to fruition. Pershing Square would receive an annual fee, paid quarterly, of 1.5% of Howard Hughes’ equity market capitalization.
“We will make available the full resources of Pershing Square to HHH to build a diversified holding company, or one could say, a modern-day Berkshire Hathaway,” Ackman said in a post on social media site X. “The new HHH will acquire controlling interests in private and public companies that meet Pershing Square’s criteria for business quality.”
Ackman said he took inspiration from the unusual career path of the legendary “Oracle of Omaha.” The 94-year-old Warren Buffett started out, essentially, as an activist investor and hedge fund manager running a series of private partnerships, until the 1960s when he closed his partnerships and took control of Berkshire Hathaway, a struggling textile business.
Today, Berkshire is worth $1 trillion with businesses in industries including insurance, energy, railroad and retail as well as a massive equity portfolio and more than $300 billion in cash.
Ackman said Howard Hughes will continue to develop and own “master planned communities” such as The Woodlands in Houston and Summerlin in Las Vegas.
“Owning small and growing MPCs that will eventually become large cities in the best pro-business markets in the country is a great long-term business,” he said in the post. “It’s a lot better than a dying textile company.”