Bill Ackman Offers $85 Per Share to Acquire Remaining Stake in Howard Hughes

NEW YORK, NY — Billionaire investor Bill Ackman‘s Pershing Square Capital Management announced Monday its offer to acquire the remaining stake in Howard Hughes Holdings, a Texas-based real estate developer, for $85 per share. The proposal represents a 38.3% premium to the company’s unaffected stock price and an 18.4% premium to its closing price last Friday.

Pershing Square, which already owns approximately 38% of Howard Hughes, proposed forming a new subsidiary to merge with the developer. Shareholders would have the option to receive cash or stock in the post-merger company. Howard Hughes’ stock surged 11% to $79.67 in premarket trading following the announcement.

In a letter to the Howard Hughes board, Ackman expressed dissatisfaction with the company’s stock performance despite its operational progress. “While we are pleased with the substantial business progress Howard Hughes Holdings has made over the more than 14 years since it went public, we, like other long-term shareholders and this board, have been displeased with the Company’s stock price performance,” he wrote.

Pershing Square initially invested in Howard Hughes in November 2010 through a $250 million rights offering at $47.62 per share. Over the past 14 years, the investment yielded a 35% total return, equating to a modest 2.2% compound annual return. The company has not paid dividends since its inception.

Ackman praised Howard Hughes’ management team, led by CEO David O’Reilly, and its nearly 1,000 employees. “The Company’s stock price performance is obviously extremely disappointing, particularly in light of the high regard we have for this board and the Company’s superb management team,” he added.

Howard Hughes, with a market capitalization of $3.6 billion, has yet to respond to the offer. The company did not immediately comment on requests from CNBC and Reuters.