The art of the deal: Frank Lowy, former chairman, Westfield Corporation

Frank Lowy says doing deals is “good for the soul”.

Frank Lowy. Illustration: Johannes Leak.

Frank Lowy says doing deals is “good for the soul”.

What he means is that deal-making is great when you win. And Lowy has won a lot of times in almost six decades of a stellar career in business.

His biggest victory was his last as supremo of Westfield Corporation, the global shopping centre giant he co-founded in 1960.

Last December, he pulled off the biggest deal in Australian corporate history: the $US24.7 billion ($32 billion) sale of Westfield to French company Unibail-Rodamco.

It was, as Lowy says, “the deal of the century”. It involved endless talks with bankers, criss-crossing the globe on a corporate jet to save a deal on the verge of failure with a mixture of charm and steely resolve, meetings on luxury yachts, and even a knighthood from the Queen.

So what is it like to pull off a $32 billion deal?

“It’s good fun,” the billionaire tells The Deal in his Lowy Family Group office at the top of the Westfield Towers building in Sydney’s Castlereagh Street. He has recently moved upstairs, given that Westfield’s new management needs the office space he previously occupied a floor or two below.

“It’s good for the soul. It is good for the soul that you are successful; it makes you happy. It was quite complex, and the negotiations were very testing. But they wanted it, and we were ready to sell.

“I didn’t make a personal decision but I was hoping that I could retire with the sale. And when you wish something or think something, somehow it happens. When it starts to happen, you know you want it and you are on the right track. Nothing overshadowed my desire to get a great deal for shareholders. So as it happened, it all combined.”

But to get the transaction to the line involved huge amounts of behind-the-scenes manoeuvring in the final months of 2017, four years after Lowy had overseen another big – and winning – deal with the split of the empire into the Australasian-focused Scentre Group and Westfield Holdings’s European and North American assets.

That deal had alerted Unibail-Rodamco, the largest commercial real estate company in Europe, that maybe one day Westfield’s overseas interests could be in play. And by the second half of 2016, Westfield’s representatives from Rothschilds and a merger and acquisitions team at Unibail-Rodamco had bunkered down for serious talks.

Then, near-disaster – as the potential acquirer walked away following due diligence when the parties could not agree on a mutually acceptable price. Something had to be done.

‘I usually put my position on the line early and don’t shift from there very much. I don’t start way out and then inch back’

Lowy flew to Paris on his private plane and quietly met Unibail-Rodamco’s chief executive, Christophe Cuvillier, while the plane sat on the tarmac. After tough talks in early December 2017, the parties agreed on the parameters, with an announcement made a few days later.

In between, Lowy and his family – including three sons Steven, Peter and David – flew to London and travelled to Windsor, where Sir Frank received his knighthood from the Queen.

And then a few weeks after Lowy announced the deal via video link to Australia on December 12, he and the family congregated on his 46m yacht Ilona in Sydney Harbour and thrashed out a future in which their privately run Lowy Family Group became an investor after decades of the family being executives and owners of assets.

Looking back, Lowy says the Unibail-Rodamco deal was the best he has ever done.

“I’m very comfortable with the final sale,” he says. “It served so many different purposes, and the universal approval [from shareholders and analysts] made it my favourite deal. I like to make deals and some of them turn out well.”

What can be learnt from a master deal-maker like Lowy?

He says you have to be all-in: he is an upfront negotiator who lets the other party know exactly what he wants – and then usually doesn’t budge until he gets it.

“I usually put my position on the line early and don’t shift from there very much,” says Lowy. “So I don’t start way out and then inch back. I don’t like that; that is not me. I don’t like to do that.

“But it is very hard. You have to give all of yourself to it. You have to live it, eat it and dream it. You have to give your full capacity. You have to have the capacity to understand the other side, even if you have a particular objective.

“You may not get to that objective, so you have to have the capacity to understand the other side and when you do all that [you] usually come to do the deal.”

Yet Lowy also admits that he tempered the main approach of his deal-making – the continual buying and building of assets – over time, even after achieving so much success.

One of his best moves, he says, was in 2008, with the opening of Westfield London in the city’s west, and then later at Stratford City as part of the regeneration of east London timed to coincide with the 2012 Olympic Games.

“I think the biggest thrill – well, business is not thrilling – the biggest step we made in the past 20 years was going to England, in a big way,” he says. “It took me 25 to 30 years to get there, because opportunities don’t come up.

‘So what is the key? It is to be flexible. Be accepting of ideas. Give up your major position sometimes’

“But I knew it was a major game-changer for Westfield. I worked very hard to get it. I fought very hard personally and with my team to lock it in.”

Yet in 2010, as Westfield Stratford City was being built, son Steven was able to convince Frank that selling some other lesser-quality assets would be timely in order to strengthen the balance sheet and stick to the best retail-friendly areas.

Says Lowy: “I said to him, you must be crazy. My philosophy over time was to buy. But nevertheless I listened. We sold a lot of properties that we could probably not have sold later on.

“So what is the key? It is to be flexible. Be accepting of ideas. Give up your major position sometimes. Don’t get stuck in a groove that goes against the wind or against the grain, or against a position. But when you decide, you move. I think I was able to do that.”

Now comes the next stage with Lowy Family Group. It already had a couple of billion dollars invested privately across a range of assets overseas and it has begun buying into technology firms such as Updater, which helps Americans change their details when they move house, and listed investment companies.

Lowy says of the transition to the private world that he “wants to be occupied, rather than work. We want to be investors, rather than owners. That is a huge difference.”

But isn’t it likely that he and the family will keep doing deals?

“Sure, I have some experience in the matter,” he says with a hint of a smile. Then comes the look of steely determination: “You have to make a judgement and then pursue it. That is it.”