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GGP Refuses Brookfield's Buyout Offer, Negotiations Continue

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GGP Inc. has rejected a $14.8 million takeover bid by its biggest shareholder, Brookfield Property Partners LP, according to a Bloomberg report.

Amid heightening rumors, on Nov 11, GGP confirmed receiving a $23 per share cash and stock offer from Brookfield to acquire the remaining stake in the retail real estate investment trust (REIT) that it does not already own. GGP also announced the formation of a special committee to examine the proposal.

Shares of GGP rallied more than 16% to $22.10 on Nov 7 when details of the offer were revealed. (Read more: GGP Investors Rejoice as Buyout Speculations Hit Headlines)

Per the recent report, although the committee has declined the “inadequate” deal, both parties continue to negotiate in order to reach an agreement. In fact, Brookfield is considering a new proposal for the deal.   
The report also mentioned that neither companies intend to make any further announcements in the matter until a definitive deal is agreed upon.

The alliance would result in one of the largest publicly-traded real estate companies of the world. In fact, according to a Reuters article, which cited Brookfield, this buyout will create a conglomerate with ownership interest in global real estate assets worth around $100 billion and an annual net operating income (“NOI”) of around $5 billion.

Per Brookfield, the above-mentioned acquisition will offer growth opportunities to GGP by transforming and repurposing its retail assets.

Of late, mall traffic has been adversely affected and retail landlords, including Regency Centers Corporation (REG - Free Report) , Taubman Centers and Kimco Realty Corporation (KIM - Free Report) , have felt the heat due to consumers’ preferences increasingly shifting toward online retail. This has resulted in widespread store closures and bankruptcy filing by the owners.

These challenges in the retail real estate markets have encouraged shareholders with majority interest in the troubled retail REITs to take the companies private at favorable terms or compel to make changes.

In fact, Taubman Centers is facing activist pressure from Paul Singer’s Elliott Management, which after amassing considerable stake in the company, is advocating strategy changes in the shopping mall giant that includes disposing the company. (Read more: Stakeholder at Taubman Centers Roots for Disposal)

Shares of GGP have underperformed the industry it belongs to, year to date. The company’s shares have lost 6.2% as against the industry’s growth of 10.3% during the period.




Further, GGP currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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