Bill Ackman Aims to Transform Howard Hughes into a "Modern-Day Berkshire Hathaway"
Pershing Square to Increase Stake Through Billion-Dollar Acquisition Proposal
Bill Ackman, the hedge fund billionaire chairman of Pershing Square Capital, known as the "Little Buffett," has begun efforts to create a "modern-day Berkshire Hathaway." He plans to diversify the portfolio of his hedge fund by acquiring companies with a solid financial structure capable of purchasing various businesses, similar to Berkshire Hathaway.
According to major foreign media including MarketWatch on the 13th (local time), Ackman proposed to purchase 11.8 million shares of real estate developer Howard Hughes for $1 billion (approximately 1.4 trillion KRW). According to the proposal, Howard Hughes will also buy back 5.9 million of its own shares for $500 million. If the deal is completed, Pershing Square's stake in Howard Hughes will increase from the previous 38% to between 61% and 69%.
Foreign media evaluate that Ackman’s acquisition proposal is the first step to grow Pershing Square to a size where it can compete with "giant companies" like Berkshire Hathaway or private equity firms in acquisitions. The plan is to transform Howard Hughes, which holds abundant real estate assets and cash flow, into a holding company that acquires various businesses like Berkshire Hathaway. In a letter to investors on the same day, Ackman boldly stated, "I apologize to Mr. Buffett, but Howard Hughes will become a ‘modern-day Berkshire Hathaway’ by acquiring a controlling stake in the operating company."
Howard Hughes is a U.S. commercial and residential real estate developer based in Texas. When Howard Hughes spun off from General Growth Properties (GGP), one of the leading shopping mall operators in the U.S., and went public on the New York Stock Exchange in 2010, Ackman was the financier behind it. Although Ackman stepped down as chairman of Howard Hughes after 12 years last year, if this deal is completed, he will become the new CEO of Howard Hughes.
This acquisition is an unmissable opportunity for Ackman, whose dream of becoming like Warren Buffett has already faced setbacks. Previously, in August last year, Ackman attempted to launch an IPO for Pershing Square USA with the goal of creating a company like Berkshire Hathaway, but the market response was cooler than expected, and the initial fundraising target was not met, causing the IPO to be canceled. Foreign media reported that Ackman is fully prepared, including bringing his investment team and combining Howard Hughes’ financial firepower.
In a letter to Howard Hughes shareholders on the same day, Ackman emphasized, "The company’s stock performance has clearly been very disappointing," and added, "Pershing Square’s management and resources will be contributed to Howard Hughes, and Howard Hughes will invest the company’s surplus cash and other financial resources in acquiring new operating companies and assets to diversify its business." Following this news, Howard Hughes’ stock price rose 9% from the previous close, finishing at $78.62.
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