Howard Hughes Holdings is giving talks with Pershing Square Capital Management more time, again.
The Woodlands-based developer this week extended a standstill agreement with Bill Ackman’s firm through April 15, the Houston Business Journal reported. It marks the second such extension in the past month as negotiations continue over a proposal to take the company private.
The latest update keeps the door open for Ackman, who previously served as chairman of the company, to boost his control from 37.6 percent to 48 percent through a $900 million bid to buy 10 million newly issued shares at $90 each.
The initial deal was deemed “unacceptable in its current form” by a Howard Hughes committee in early March, though the company agreed to keep negotiating under the standstill.
Ackman would return as chairman and CEO of the holding company under the new plan, while David O’Reilly would remain CEO of Howard Hughes Corporation, the real estate arm that oversees the firm’s master-planned communities across the country.
Ackman, who spun off Howard Hughes from General Growth Properties in 2010, has long argued the company is undervalued. His bet is that cash generated from its real estate holdings — including The Woodlands in Houston, Ward Village in Honolulu, Summerlin in Las Vegas and Teravalis outside Phoenix — could be better reinvested elsewhere for greater returns.
He’s pitched the take-private strategy as a path to transform the firm into a modern-day Berkshire Hathaway, using the development cash flows as a launching pad for a broader investment portfolio.
Howard Hughes’ leadership puts the company’s net asset value at $118 per share, far higher than Ackman’s $90-per-share bid.
The ongoing talks come as Howard Hughes is attempting ambitious development plays of its own, including an $80 million push to bring a major movie studio to Summerlin in partnership with Mark Wahlberg, Sony and Warner Bros. Discovery. It’s also preparing to open model homes at Teravalis, a planned city west of Phoenix that could eventually house 300,000 people.
For now, Ackman’s offer, and the future of Howard Hughes as a public company, is up in the air. The company has warned there’s no guarantee a deal will be reached. But as the April 15 deadline nears, shareholders are watching closely to see whether Ackman’s long game will come to fruition.
— Judah Duke
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