Howard Hughes Shares Soar on Ackman's Takeover Offer

Howard Hughes Holdings (HHH) shares are soaring on Monday, up by 11% at 10 a.m. ET, as the S&P 500 and Nasdaq Composite are firmly in the red. The real estate developer's stock price surge comes on the heels of billionaire investor Bill Ackman's Pershing Square Capital Management offering to buy the remaining shares it doesn't already own for $85 per share.

Ackman, who has been involved with Howard Hughes since its 2010 spinoff from General Growth Properties, currently owns about 38% of the company. In a letter to Howard Hughes' board, Ackman expressed his displeasure with the company's stock performance, noting that it has generated just a 2.2% compound annual return since going public in 2010. He believes that the company's long-term shareholders, including himself, have been displeased with the stock's performance and are interested in a potential transaction.



Pershing Square's offer represents an 18% premium over Friday's closing price of $71.78. Shareholders will have the option to receive the full payment in cash or roll over their shares into the post-merger entity. Ackman plans to create a Pershing Square subsidiary that will merge with Howard Hughes, with the real estate operations remaining unchanged. The combined company will still be a publicly traded entity, but Ackman will control more than 60% of the shares.

Ackman's goal is to turn Howard Hughes Holdings into a "modern day Berkshire Hathaway," suggesting that he believes the company has significant untapped potential. If Ackman's vision is realized, shareholders who roll over their shares could see higher returns in the long run.



In his letter, Ackman noted that while he is pleased with the substantial business progress Howard Hughes has made since going public, he, like other long-term shareholders, has been displeased with the company's stock price performance. By offering to buy the remaining shares, Ackman is providing an opportunity for shareholders to cash out or maintain their exposure to the company's growth prospects while still benefiting from the merger.

The move by Ackman's firm reflects its continued interest and investment in the real estate developer, which has been a part of its portfolio for an extended period. Howard Hughes did not immediately respond to a request for comment.

In conclusion, Howard Hughes Holdings' stock price surge on Monday is a direct result of Bill Ackman's Pershing Square Capital Management offering to buy the remaining shares it doesn't already own for $85 per share. Ackman's proposed merger structure benefits both Pershing Square and Howard Hughes shareholders by offering a premium for their shares, providing a roll-over option for long-term investors, and potentially leading to higher returns and improved performance. Ackman's goal is to transform Howard Hughes Holdings into a modern-day Berkshire Hathaway, suggesting that he believes the company has significant untapped potential.