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France’s Unibail-Rodamco has agreed to buy shopping mall owner Westfield for $24.7 billion including debt, in what would be the biggest takeover of an Australian company on record.
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The deal accelerates consolidation amid the global retail property sector as it grapples with challenges from online retailers led by Amazon.com. It comes on the heels of world No. 2 retail real estate investment trust GGP’s rejection of a $14.8 billion offer from Brookfield Property for the two-thirds it did not already own.
Westfield, which owns and operates 35 shopping centers in the United States and United Kingdom valued at $32 billion, said the transaction was “highly compelling” for Westfield and Unibail-Rodamco’s shareholders.
“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.
Unibail-Rodamco said Westfield shareholders would receive a combination of cash and shares, valuing Westfield at $7.55, or A$10.01 a share, an 18 percent premium to Westfield’s last trade.
Unibail-Rodamco said the deal would create a global property leader with $72 billion of gross market value, strategically positioned in 27 of the world’s most attractive retail markets.
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Shopping center owners around the world are scrambling to reinvent themselves to keep up with rapid changes in consumer behavior and boost earnings.
The expansion of e-commerce giant Amazon.com has coincided with an explosion in online purchases of physical goods, while consumers increasingly treat malls as places for socializing.
Once-mighty United States department store operators like Macy’s and J C Penney have announced plans to shut hundreds of stores in recent years, putting pressure on landlords to find new “anchor tenants” or come up with new ways to grow returns.
Westfield has been seen as a pioneer in U.S. mall redevelopment, melding traditional mall retailers with atypical mall fixtures like upscale food courts, high-end restaurants, bars, cinemas and boutique fashion outlets.
“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.
Chairman Lowy, a holocaust survivor-turned-knighted property billionaire, will retire from company he co-founded, and his sons Steven and Peter, will retire from their positions as co-chief executives.
Westfield’s flagship malls include Westfield London, where it is working on a 600,000 pound ($800,000) expansion, and Century City in Los Angeles, where it is completing a $1 billion overhaul.
It also has stakes in 18 suburban U.S. shopping centers, three of which it wholly owns.
Shares in Westfield were halted earlier on Tuesday pending the announcement, having last traded at A$8.50.
(Reporting by Byron Kaye in Sydney and Sonali Paul in Melbourne; Additional reporting by Swati Pandey in Sydney and Susan Mathew in Bangalore; Editing by Lincoln Feast)