SYDNEY / MELBOURNE (Reuters) – Unibail-Rodamco, the largest real estate group in Europe, agreed to buy the owner of Westfield Corp Mall ( WFD.AX ) for $ 16 billion, marking the largest acquisition of an Australian company and a change in global retail property to offset online purchases.
The sector is grappling with the challenges of online retailers led by Amazon.com Inc ( AMZN.O ) and the agreement, which according to Westfield was "highly convincing" for shareholders, follows the world No 2 Investment real estate investment trust GGP ( GGP.N ) rejection of Brookfield Property offer ( BPY.O ).
"Unibail-Rodamco's record makes it the natural home of Westfield's brand and business legacy," said Westfield president Frank Lowy, a holocaust survivor who became a multi-millionaire since he co-founded the group in 1960.  The agreement gives the European group exposure to the United States and Great Britain, where Westfield owns and operates 35 shopping centers, including in London. It has been a pioneer in the remodeling of the US commercial center. UU., Merging traditional stores of shopping centers with atypical facilities in shopping centers, such as first-class food courtyards, high-end restaurants, bars, cinemas and boutique fashion stores.
Unibail-Rodamco ( UNBP.AS ), which is very exposed to the euro zone and focuses on large sites with large footprints and high-profile tenants such as Apple, Zara and Primark, shareholders said of Westfield. would receive cash and shares for a total of $ 7.55, or A $ 10.01, a premium of 18 percent per share.
The shares in Westfield were suspended on Tuesday pending the announcement, after having quoted for the last time at A $ 8.50.
"With an A $ 10 at the front, the offer does not look bad," said Sydney-based CLSA analyst Sholto Maconochie, adding that the agreement would "create the world's leading operator of shopping centers" .
"Westfield is the best option for us and a natural extension of our strategy," Unibail CEO Christopher Cuvillier said in an analyst call after the announcement of the deal, which would be worth $ 24.7 billion including debt.
Unibail-Rodamco, formed in 2007 by the merger of France's Unibail and Rodamco based in the Netherlands, said it would revalue its shopping centers with the Westfield red logo and create a global leader with a gross market value of $ 72. one billion in 27 retail markets.
Deutsche Bank ( DBKGn.DE ) and Goldman Sachs ( GS.N ) have provided 6,100 million euros in funds to cover the cash portion of the offer, said Unibail . Shares of Unibail-Rodamco fell 2.2 percent at 0929 GMT, and analysts at Kepler Cheuvreux said the deal seemed expensive.
Shopping center owners struggle to reinvent themselves to keep up with the rapid changes in consumer behavior, with the expansion of ecommerce giant Amazon.com coinciding with an explosion in online shopping, while Consumers increasingly treat shopping centers as places to socialize and shop at the window.
Once dominant US department store operators such as Macy & # 39; s Inc ( MN ) and JC Penney Co Inc ( JCP.N ) have announced plans to close hundreds of stores in recent years, pressing homeowners to find new "anchor tenants" or propose new ways to increase performance.
"Westfield has assets in the United Kingdom and the US that are in mature Amazon markets, and they are already at 50 percent through that online retail change," said Morningstar analyst Tony Sherlock about the deal.
Lowy, who said that the talks to seal an agreement took only six weeks and expressed "mixed emotions" about the sale, will retire as president and his sons Steven and Peter will retire as CEOs.
The Lowy family owns 9 percent of Westfield and will end up with a 2.8 percent stake in Unibail-Rodamco if the deal goes ahead. The Lowys said they would rather be investors now than executives, having accumulated 145 years in Westfield.
Lowy said it made sense to sell because it was a "very good price," but he acknowledged that the sale partly reflected the global consolidation trend and pressures on retailers.
The offer price closed the gap between the underlying value of the company and the price of its shares, added Peter Lowy.
Westfield's flagship shopping centers include Westfield London, where it is working on a 600 million pound ($ 800 million) expansion and Century City in Los Angeles, where it is completing a $ 1 billion review.
It also has interests in 18 US suburban shopping centers. UU., Three of which is your property.
Report by Byron Kaye in Sydney and Sonali Paul in Melbourne; Additional reporting by Swati Pandey in Sydney and Susan Mathew in Bangalore, Geert De Clercq, Blandine Henault, Matthieu Protard and Maya Nikolaeva in Paris; Edition of Lincoln Feast and Alexander Smith