Westfield and Unibail-Rodamco do $32.8b deal

Westfield and Unibail-Rodamco do $32.8b deal

15 December 2017

Sir Frank Lowy has agreed to sell his global shopping empire, Westfield Corporation for $32.8 billion to European giant Unibail-Rodamco as landlords around the world bulk up against the rise of online shopping.

In what would be Australia’s biggest takeover, the deal will create a $95 billion global retail giant with shopping centres spanning major cities in 13 countries.  

The Australian reports that it is a new record for an Australian takeover, with Unibail-Rodamco offering a combination of cash and scrip valuing each Westfield share at $US7.55, or $10.01, a 17.8 per cent premium to Westfield’s Monday share price.

Sir Frank said the deal was the culmination of the path Westfield has taken since it was restructured three years ago, creating two listed trusts including Scentre which owns and operates Westfield malls in Australia.

“Unibail-Rodamco’s track record makes it the natural home for the legacy of Westfield’s brand and business,” Sir Frank said.

“We look forward to seeing Westfield continue to grow as part of the world’s premier owner of flagship shopping destinations.”

The Australian Financial Review reports that the transaction values the Lowy family’s stake at $1.976 billion. Based on the structure of the deal, the family would receive about $692 million in cash and $1.284 billion in Unibail-Rodamco securities.

Sir Frank is the fourth-richest person in Australia with wealth of $8.26bn, according to this year’s rich list.

The 87-year-old was last week recognised for his contribution to the British economy in a knighthood ceremony at Windsor Castle.

The mega-deal comes as the crowning achievement in a retail property empire that began with a Blacktown mall in 1959, with Westfield floated the following year.

The Lowys still retain a small stake in Scentre, the operator of Westfields malls in Australia, which is not part of the deal

Paris-based Unibail-Rodamco is the biggest commercial property landlord in Europe, while Westfield owns properties across the United States and in London.

“All of us at Unibail-Rodamco have immense respect for what the Lowy family and the Westfield team have accomplished with the Westfield brand and the company’s iconic collection of world class shopping destinations,” said Unibail-Rodamco chief executive Christophe Cuvillier.

When the deal is completed as expected, Unibail-Rodamco will have a portfolio of 104 prime assets across 13 countries. It will have assets in prime retail destinations in London, Los Angeles, Munich, New York, Paris,  Stockholm, Vienna, Madrid and Warsaw, among other cities.

When asked if he was sad, Lowy said: “I am happy about the decision.”

“When I look back over 57 years it is more than a lifetime. I am not sad but it is kind of bittersweet to me.”

Lowy said he will continue in his role as chairman of the Lowy Family Group, a family owned company run by his son, David. It invests in a range of assets around the world

Regarding the impact of online retail giant Amazon and others on the Westfield business, Steven Lowy said global online shopping giant Amazon “is not relevant to us” because Westfield had “adapted to be relevant in today’s changing times”.

He said Westfield has changed its offering to appeal to younger generations. Its centres were now focused on food, fashion, entertainment and leisure.

As flagged by The Australian’s DataRoom column, Deutsche Bank and Goldman Sachs are fin­ancial advisers to Unibail-Rodamco, while Rothschild is acting as lead financial adviser to Westfield and UBS and Jefferies are joint ­financial advisers.