This was published 6 years ago
'Price is right': Unibail-Rodamco stands firm on Westfield $30b offer
European retail giant Unibail-Rodamco is standing firm on its $30 billion offer for Frank Lowy's Westfield, saying ''the price is what the price is''.
Unibail-Rodamco chief executive Christophe Cuvillier is in Australia speaking to Westfield institutional investors ahead of the release of the takeover document late next month.
Unibail-Rodamco CEO Christophe Cuvillier is in Australia seeing investors.Credit: Peter Braig
''We think the price is full and fair and we think its the best price for Unibail-Rodamco shareholders and Westfield shareholders,'' Mr Cuvillier said.
''When you think about, two-thirds of Unibail-Rodamco shareholders are necessary to vote in favour of this and 75 per cent of Westfield shareholders ... so it has to be at the right price for our shareholders and the right price for Westfield shareholders.
''And we think the price is right.''
Mr Cuvillier will not stay for the release of what will be the last Westfield result on Thursday, February 22. Westfield directors declined to comment on the deal.
Surprise offer
Unibail-Rodamco surprised investors on December 12 last year with a cash-and-scrip offer for Westfield, valuing the Australian group at an equivalent $10.01 per security or $30 billion.
But with the exchange rate between euros for the Paris-based group, US dollars for Westfield's main US-based malls, and conversion back to Australian dollars, plus the falls in the share price of the two groups, the offer is now equal to $8.64.
Some Australian investors with small holdings, and analysts at Macquarie Equites, have suggested the fall in the bid's value could prompt a counter-bidder or make Unibail-Rodamco sweeten the offer.
If successful, the newly merged group will become the biggest retail landlord in the world. Unibail-Rodamco is the largest mall owner in Europe, while Westfield owns the premium malls in North America and two in Britain.
It will be the creation of company with a €61.1 billion ($95.7 billion) market value and 104 assets in 27 of the world’s most attractive retail markets and cities.
Under the deal, all the shopping centres will be called Westfield with the familiar big red W signage. The offer does not include the Australian and New Zealand assets, which are owned by Scentre Group.
The Lowy family has a direct 10 per cent holding in Westfield and could also renegotiate terms with the backing of Australian funds houses that want a greater cash component.
Mr Cuvillier said Unibail-Rodamco had a ''proven track record'' and offered ''solid value" for Westfield and Unibail-Rodamco shareholders.
''The Lowy family, which I have a lot of respect for and they are definitely astute businessmen, recommended [the offer] to their board and the board voted unanimously in favour of the transaction so I think the price is fair ... and the shareholders will be benefiting from the future value creation of the new company, '' Mr Cuvillier said.
''The price is what it is ... and we think the price is good.''
The exterior of the Westfield Stratford City mall, operated by Westfield Group.Credit: Bloomberg
Strategic offer
Unibail-Rodamco's chief financial officer, Jaap Tonckens, said while he had heard ''whispers'' of investors wanting the terms of the deal changed, ''the issues with exchange rate movements were always inherent in the Westfield share ownership''.
''The strategic rationale makes imminent sense to put these two winners together,'' Mr Tonckens said.
''Look at where the stock prices are of other real estate companies recently ... they are always changing.''
Analysts at CLSA said while they thought the emergence of another bidder was unlikely, they would not rule out a consortium of private equity and pension funds given recent speculation around US retail owner Macerich with Ontario Teachers, and General Growth Properties with Brookfield.
''This kind of bid would have to be cash and over $A10, say $A10.50, with the extra 50¢ over the initial bid equivalent to $1 billion, which is the synergies under the deal which you get if you take the Unibail cash/scrip offer,'' CLSA's Michael Vincent said.
''Alternatively, Unibail might increase the cash component of the deal, given it doesn’t look that attractive at the moment. If Unibail offered 46 per cent cash ($US3.67) this would increase the implied offer price back to A$10, but cost and additional $US1 billion, which would increase their gearing to over about 42 per cent.
''Unibail could do this, but would have to divest about $4 billion of assets as opposed to the $3 billion it has announced, which is unlikely. A bump somewhere in the middle of this is more likely after the marketing and feedback period before the vote.''