Retail

European Property Group Makes A Big Buy Into US Malls

Unibail-Rodamco, Europe’s largest property firm, is on track to purchase U.S. and U.K. mall operator Westfield Corp. for $16 billion.

That big buy is a defensive move designed to help the firm fend off the digital onslaught led by eCommerce operations like Amazon, according to reports from Reuters. Unibail, which owns shopping centers all over Europe, gives the brand new exposure to the United States and Britain, where Westfield currently operates 35 malls.

Co-founder and chairman Frank Lowy was leading the mall redevelopment charge throughout his tenure at Westfield, changing the nature of the shopping center experience with upscale food courts, high-end restaurants, bars, cinemas and boutique fashion outlets to entice shoppers.

The deal has taken approximately six weeks to reach, according to Lowy. His family will no longer run the company, but will retain a 2.8 percent stake in the firm. Lowy said selling made sense as Unibail offered a “very good price,” and that the time was right for his exit after nearly 60 years.

Around 37 percent of the combined entity’s portfolio would be held in France and 22 percent in the United States.

“Westfield is the best fit for us and a natural extension of our strategy,” said Christopher Cuvillier, Unibail’s chief executive officer, following the announcement of the proposed deal. That deal would be worth $24.7 billion, including debt, if it goes through.

Areas of focus for Unibail will include large sites with heavy foot traffic and favored tenants like Apple, Zara and Primark. Analysts also believe the Westfield model will be importable and useful.

Westfield shareholders will receive cash and shares totaling $7.55, or A$10.01, an 18 percent premium per share. The shares were halted earlier on Tuesday pending the announcement, having last traded at A$8.50.

“With a A$10 handle in front, the offer doesn’t look bad,” Sydney-based CLSA analyst Sholto Maconochie said, adding the deal would “create the leading mall operator globally.”

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