Daily Management Review

Australia's Westfield’s Acquisition For $15.7 Billion To Be The Largest For The Country


12/12/2017




Australia's Westfield’s Acquisition For $15.7 Billion To Be The Largest For The Country
It would possibly be the largest acquisition of an Australian company ever after Westfield Corp, owner of serval shopping malls, is acquired by France’s Unibail-Rodamco, for about $15.7 billion.
 
The global retail property sector is under pressure from the online retailing companies such as Amazon.com Inc. and there has been a trend of consolidation in the industry of late. The deal underscores that trend.
 
It was not long ago that a $14.8 billion offer from Brookfield Property was rejected by GGP Inc, the second largest retail real estate investment trust, where the former had proposed to purchase two thirds of the later. 
 
For Westfield and Unibail-Rodamco’s shareholders, the transaction was “highly compelling”v, said Westfield. The company is active in the U.S. and the U.K where it owns and operates 35 shopping centers. The market value of the company is $32 billion.
 
 “Unibail-Rodamco’s track record makes it the natural home for the legacy of Westfield’s brand and business,” Westfield Chairman and co-founder Frank Lowy said in a statement.
 
Offering a premium of 18 percent to the last trading value of Westfield, Unibail-Rodamco said that the company had been valued at $7.55, or A$10.01 a share and the shareholders of Westfield would be provided shares and cash.
 
The total value of the deal would be $24.7 billion including debt.
 
The combined company would become operational in 27 retail markets and would become a global leader in its segment with the gross market value of $72 billion.
 
There have been fast changes in consumer behavior and shopping centers around the globe are trying hard to cope up with the changes to boost revenues.  
 
Malls are increasingly being treated as places to socialize by customers while they are more akin to purchasing physical good online boosting the market share of companies like e-commerce giant Amazon.com.
 
In the U.S., property owners have been forced to seek new “anchor tenants” or invent new methods to create returns in the face of announcements of shut down plans of hundreds of stores in recent years by the once retailing giants and store operators like Macy’s Inc and J C Penney Co Inc.
 
To combat the demise of retail stores, unusual mall features such as fashionable food courts, expensive restaurants and bars, theatres and boutique fashion outlets are being clubbed with traditional mall retailers by Westfield , viewed as a forerunner in U.S. mall redevelopment.
 
 “Westfield has got assets in the UK and in the U.S. that are all in mature Amazon markets. They’re already 50 percent through that online retail switch,” said Morningstar analyst Tony Sherlock.
 
“This is obviously a day of mixed emotions for me although I am 100 percent comfortable with our decision,” Frank Lowy said. It took just six weeks to seal the deal, he said. 
 
(Source:www.reuters.com)






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