THE WOODLANDS, Texas - Howard Hughes (NYSE:HHH) Holdings Inc. (NYSE: HHH), a real estate development company, currently trading at $78.62 with a market capitalization of $3.91 billion, today confirmed receipt of a merger proposal from investment firm Pershing Square Capital Management LP. Pershing Square, which currently holds approximately 37.6% of Howard Hughes' common stock, has expressed interest in acquiring additional shares to gain majority ownership through a merger with a subsidiary of Pershing Square Holdco, L.P. According to InvestingPro data, analyst price targets range from $81 to $105, suggesting potential upside from current levels.
The company's board had previously established a Special Committee of independent directors on August 8, 2024, to consider Pershing Square's interest in a potential transaction. This committee is tasked with evaluating the new proposal and advising on the next steps. Howard Hughes' shareholders are not required to take any action at this stage. InvestingPro analysis shows the company's stock is currently in oversold territory, with strong liquidity metrics indicating its ability to meet short-term obligations.
The merger is contingent upon several conditions, including the negotiation of a definitive agreement and approvals from the Special Committee and a majority of the company's shareholders not affiliated with Pershing Square.
At this point, there is no certainty that Howard Hughes Holdings Inc. will pursue this proposed transaction or any other strategic alternatives. The company has stated that it will not provide further comments unless it becomes necessary or appropriate to offer additional disclosure.
The proposal has been detailed in an exhibit to the company's Form 8-K filing with the U.S. Securities and Exchange Commission dated January 13, 2025. Financial advisory services to the Special Committee are being provided by Morgan Stanley (NYSE:MS) & Co. LLC, with Hogan Lovells US LLP and Richards, Layton & Finger, P.A. serving as legal counsel.
Howard Hughes Holdings Inc. is known for owning, managing, and developing a range of real estate properties across the United States, including master planned communities and mixed-use developments. The company's portfolio includes notable projects in Maryland, Texas, Las Vegas, Honolulu, and the Greater Phoenix area. Recent financial data from InvestingPro shows revenue growth of 10.91% in the last twelve months, though the company faces profitability challenges. This news is based on a press release statement from Howard Hughes Holdings Inc.
In other recent news, a merger proposal has been put forth by Pershing Square's Bill Ackman between Howard Hughes Holdings Inc. (HHH) and a subsidiary of Pershing Square Holdco, L.P. The proposed transaction, which is subject to board approval and due diligence, would involve a newly formed merger subsidiary of Pershing Square Holdco merging with HHH, with the latter surviving as the corporation. In this arrangement, HHH stockholders would have the option to receive most of their merger consideration in cash, or to roll-over their shares into the post-merger company.
The proposed transaction also entails Pershing Square Holdco purchasing shares from non-Pershing Square affiliate shareholders of HHH, and a simultaneous share repurchase by the company, financed by newly issued bonds. Following the transaction, the senior leadership team of Pershing Square Holdco would assume executive leadership roles at HHH, while the Howard Hughes Corporation (HHC), HHH’s principal real estate subsidiary, would remain largely unchanged and continue to be managed by its current senior leadership team.
In other recent developments, Piper Sandler has reiterated its Overweight rating on Howard Hughes Holdings, maintaining a $105.00 price target. The firm cites the company's unique Master Planned Communities (MPC) business model as a significant strength, and notes an increase in demand for new homes due to a slowdown in existing home sales. Piper Sandler also emphasized that Howard Hughes is in a position to showcase the profitability of its business model, particularly as it continues to sell land, thereby increasing the value of its remaining acreage.
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