Westfield bid is fair and won’t be changed: Christophe Cuvillier
Westfield stock would be significantly lower without Unibail-Rodamco’s $32 billion bid, Christophe Cuvillier says.
Unibail-Rodamco chief executive Christophe Cuvillier has ruled out increasing the bid for Westfield because the offer remains “full and fair” and told the shopping centre giant’s shareholders its stock would be significantly lower without the $32 billion bid.
The Paris-based chief executive leading the campaign to buy Westfield yesterday told The Australian the company’s recent share price fall was in line with the majority of global real estate investment trusts (REITs) caught up in the global market volatility.
Unibail has offered Westfield 0.01844 of its shares and $US2.67 cash for every one share of the Australian-listed company.
The deal valued Westfield at $10.01 a share when it was offered in early December. However, Unibail’s share price is now down about 13 per cent, which with currency fluctuations values Westfield at about $8.75 a share.
Australian fund managers have raised the prospect of Unibail topping up either the cash or script component of the bid, but the transaction requires two-thirds of Unibail shareholders to approve it, which reduces the chance of a raised offer.
Westfield then needs support from 75 per cent of its investors for the merger to go ahead. A meeting date has yet to be set but is expected to be before June.
“We think this is a very good deal for Westfield shareholders because the way this deal is structured, part in cash and part in shares, they will benefit from the future value creation, which we think is very significant,” Mr Cuvillier told The Australian.
“We think the deal is priced at a very fair price. This process has taken some time. We think the price is full and fair.
“I don’t see any reason we need to change it. When you look in absolute terms at the stock price of Unibail-Rodamco yes, it has gone down recently.
“But not more than other major European or American or Australian groups ... I think you should not look at this in isolation but relative to what has happened to other players.
“When you look at it relative to other players there’s absolutely no reason we should change the offer. We will not move the offer price. We think it’s full and fair.”
Mr Cuvillier said the deal was structured so that 65 per cent was in scrip, which should allow investors in the merged company to benefit from future growth.
The merger would create a global property behemoth with 104 shopping centres in Europe, Britain and the US worth €61.1bn, and has been viewed as an exit strategy by founder Frank Lowy and his family, who own 9.5 per cent of the landlord.
Mr Cuvillier said he had not fielded an approach from the Lowy family on the bid price.
Westfield shareholders will be able to choose to take the share-based component of the deal in French or European scrip.
However, Unibail plans to list a chess depositary interest on the ASX, which will be exchangeable with the merged company’s shares, which will remain listed in Paris and Amsterdam.
Mr Cuvillier said: “The price has to be right for our shareholders, it has to be right for Westfield shareholders. If you look at the volatility, it’s been a slight impact on Unibail’s stock price when the deal was announced, which is to be expected when a deal of this magnitude is announced.
“Then when we look at Unibail’s performance against its main peers in Europe or the US, we are in line with where they are faring.
“What we don’t know is where Westfield might trade absent such a transaction. We think that the price is fair.”
Unibail chief financial officer Jaap Tonckens said it was difficult to argue the metrics of the deal should be changed because the Unibail share price had come under pressure.
A number of the major global REIT share prices have dropped significantly since the US Federal Reserve last month flagged that interest rates could start to rise soon, which sent bond yields soaring.
Share prices in the major US REITs that are considered rivals to Westfield have, on average, dropped 3.4 per cent since Unibail’s bid was made in December.
The Australian company has risen 6.9 per cent, in US dollar terms.
It is estimated that if Westfield had traded in line with those companies, its stock price would be at $7.90, compared to the current level of $8.80.
Mr Tonckens said: “One of the key elements is that there is no such thing as an absolute value here.
“There has been a long discussion on the transaction and we have had a very clear alignment on the amount of equity and cash in the deal … there was full agreement on the structure of the transaction.
“Everyone realises share prices go up and they go down, but on a relative value basis that means every Australian shareholder will be getting a stapled security, so they get the great ride back up.
“Where we are trading now does not happen frequently.”
A merged Unibail and Westfield will be headquartered in Paris while Mr Tonckens will relocate to the US as the group’s CFO.
The Australian head office of Westfield would be closed but the number of job losses from the merger is expected to be minimal.
To join the conversation, please log in. Don't have an account? Register
Join the conversation, you are commenting as Logout