Westfield bought by Unibail Rodamco in £18.5bn deal

Shoppers congregate at the Westfield Valencia Town Center

Shoppers congregate at the Westfield Valencia Town Center

Paris-based commercial landlord Unibail-Rodamco is acquiring Sydney, Australia-based Westfield Corp., which counts the World Trade Center mall in lower Manhattan among its USA properties, in a cash-and-stock deal valued at $15.7 billion. Westfield's two (soon to be three) London sites were mentioned as particularly attractive for the new owners. "If you think about where cap rates and yields are going in the USA and the United Kingdom, which we think will be stable to upwards, the pricing is aggressive".

Unibail-Rodamco invests in commercial property, from malls to office space, mainly in mainland Europe.

The deal will see the creation of a giant global property company with 104 shopping malls scattered around the globe. Unibail-Rodamco shares have fallen 1.2 percent.

Founded in Sydney in 1953 by Frank Lowy and John Saunders, Westfield now has interests in 35 shopping centres in the U.S. and the United Kingdom, while its Australian centres are managed by the separately listed Scentre Group. Its portfolio of assets are valued $49.8 billion.

Dozens of malls in the US are changing hands as part of a mega real estate takeover.

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"Firstly because it's a very good price for our shareholders and also from our point of view and the company I think we want to change our roles in the world we would rather be investors than executives".

Both boards of directors approved the transaction, which is expected to close in the first half of next year. It gets nearly 70 percent of its US$1.8 billion annual revenue in the U.S., where companies are trying to repurpose struggling brick-and-mortar shopping centers. "They will become a dominant player, have the best relationships with retailers and therefore be best placed to create the malls of the future".

Once the deal is completed, the combined group will have gross market value of $95.43 billion.

The consideration comprises 0.01844 Unibail-Rodamco stapled securities plus $2.67 in cash for each Westfield security.

Westfield shares were worth $8.50 when they last traded, valuing the company at $17.6 billion on the ASX.

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Westfield's share price is down about 10 percent in 2017. The shares were suspended yesterday ahead of the announcement.

"This transaction is in the best interests of shareholders", he told reporters in Sydney via a televised conference from Milan. That compares with a 23 percent decline for Chicago-based GGP Inc. and a 108 percent increase for Simon Property Group Inc. stock in the same period.

They have fallen more than 20 per cent since mid past year as investors fret about the ability of shopping centre owners to continue delivering fat returns amid the rise of online shopping.

According to the latest Bureau of Labour Statistics, the retail industry has lost an average of 9,000 jobs a month this year.

Unibail-Rodamco owns 69 shopping centers in 11 countries in Europe, including Paris's prominent Forum Des Halles.

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