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New York activist Bill Ackman is stepping up pressure on General Growth Properties Inc. to consider a merger agreement that he says has been thwarted by Brookfield Asset Managment Inc.
In a letter to General Growth’s board, filed Monday with the U.S. Securities and Exchange Commission, Ackman called for the formation of a special committee of directors to review a merger with rival shopping mall operator Simon Property Group.
The letter accused Brookfield, which owns a 40-percent stake in General Growth, of “unfairly expropriating” control of the company and impeding a proposed merger last October with Simon Property that would have paid shareholders a 65-per-cent premium on its then-trading price of $12.70 (US).
Ackman said that Brookfield’s chief executive officer Bruce Flatt told him in a November meeting that it was not interested in the Simon Property offer and instead wanted to mount their own bid to acquire control of General Growth.
At a meeting last month, Ackman said Flatt told him Brookfield was in discussions with an unidentified sovereign wealth fund to help finance a General Growth transaction.
“Over the past 10 months, Brookfield has repeatedly told us that it has been working to put together a transaction that would be comparable or superior to the Simon transaction,” the letter said.
Brookfield disclosed last week that it is no longer pursuing a deal.
A spokesman for Brookfield declined to respond to Ackman’s letter. A spokesman for General Growth declined to comment on his request for a special committee.
Ackman said Brookfield offered in July to acquire about 80 percent of the 72 million General Growth shares owned by Ackman’s Pershing Square Capital Management at a price of $19 a share, but the offer was declined. Including warrants and swaps, Pershing owns a 10.2-per-cent stake in the mall operator.
“Brookfield is motivated to buy us out because … we are the last remaining significant impediment to Brookfield taking control” of General Property, his letter said.
In a statement last week, Brookfield cast its discussions about a possible transaction with General Growth as an attempt to satisfy Pershing’s desire to sell its stake for a premium.
Ackman’s letter said the statement “mis-characterizes” his talks with Flatt. “At no time has Pershing Square sought liquidity for its [General Growth] stake in conversations with Brookfield.”
Although Simon Property is not in discussions with General Growth, Ackman said he is “confident” the firm is interested in a merger and that a deal could be negotiated within 60 days. A combined company would be financially stronger and give shareholders the option of retaining a stake in the new entity.
“We find it difficult to understand why anyone other than Brookfield would object to the Simon transaction and why a special committee of the board would not promptly enter into negotiations with Simon,” the letter said.