Unibail-Rodamco has received approval from its shareholders to push ahead with its proposed takeover of Westfield.
During its annual general meeting in Paris last week, the French property giant’s shareholders gave the green light for its £18.5 billion takeover.
Westfield’s board of directors have already expressed their support, but its shareholders are due to pass their judgement on Thursday.
“Today marks a new and major step forward in the acquisition of Westfield, a natural extension of Unibail-Rodamco’s strategy of concentration, differentiation and innovation,” said Unibail-Rodamco’s chief executive Christophe Cuvillier. “I would like to thank our shareholders for their support for the proposed transaction, which represents a compelling opportunity for continued profitable growth and value creation.
“We now look forward to the Westfield securityholders’ vote on the transaction, as the ultimate step toward the creation of the premier global developer and operator of flagship shopping destinations.”
Westfield first announced in December that it would be bought by Paris-based Unibail-Rodamco. Once the deal goes through, it will create a combined global estate worth around £52 billion.
As part of the deal, Westfield Corporation’s Australian owners would receive £5.66 a share at a 17.8% premium.
The deal pertains Westfield’s estate across Europe, including the two in London, and North America. Westfield’s Australian and New Zealand operations have been run independently by the Scentre Group since 2014.
ISS says in its report that a vote for approval is warranted. ''There are attractive terms and reasonable premium to trading prices of Westfield securities prior to the announcement of the transaction.”
Winston Sammut, the head of Folkestone Maxim A-REIT Securities Fund, said he is confident the vote will go in the favour of the offer.
''With the price equivalent now at about $9.15, it is close enough to get Westfield investors over the line,'' he said. ''Given Unibail's resounding 'yes' vote in Paris, it will be very difficult for any term to change or the entry of a third party.''
On Thursday last week in France, 94% of Unibail shareholders voted 'yes'. The deal also has the full support of the Lowy Family, which has a 10% direct interest in Westfield, and the Westfield board.
A vote of 75% is required by Westfield investors to approve the deal.
RPA Perspective The proposal to combine Westfield and Unibail-Rodamco will create a $US74 billion ($98.7 billion) portfolio including 102 retail assets, of which $US56 billion or 85% were considered "flagship".
Macquarie Bank said, if successful, Westfield is set to cease trading on the ASX on May 30 as part of the Unibail-Rodamco transaction, subject to shareholder approval. Shareholders will receive a combination of cash and Unibail shares which can trade on the ASX as CHESS Depository Interest (CDIs).
''We expect that the new CDI entity will not drop from any indices at the June rebalance,'' Macquarie Bank said.
''We expect the new Unibail-Rodamco CDI entity will remain in the relevant indices post the June rebalance, however there is a risk that it will be removed from the S&P/ASX 20 due to its market cap being below the threshold.
''As shareholders will also receive a cash payment we expect that this will be allocated equally across portfolios creating some demand flow in all stocks. This will be most evident in ASX 300 A-REIT stocks, due to the amount of passive funds and its small number of members.''
CLSA analyst, Sholto Maconochie said, in a report, he believes the combination of two of the world’s leading mall owners will create the world’s premier owner and developer of flagship malls with better geographic diversification and less risk.
''Unibail gets exposure to flagship UK and US assets and an enviable development pipeline, whilst Westfield unitholders get access to flagship European assets, diluted US regional exposure and superior earnings growth and yield. Westfield unitholders also crystallise value now via 38 per cent cash at a premium,'' he said.
