Competing offer for Westfield 'may yet emerge'

Nick Lenaghan|Apr 17, 2019

With the backing of Sir Frank Lowy, the $33 billion takeover of Westfield Corporation by European giant Unibail-Rodamco looks all but certain.

But while the prospect of a competing bid is unlikely, it cannot be ruled out entirely, especially given the upsurge of corporate activity in the global retail property trust sector, according to JPMorgan.

“In our view, the only global listed entity which could conceivably launch a competing bid is the US-listed Simon Property Group,” analysts Richard Jones, Ben Brayshaw and Krzysztof Kaczmarek wrote in a note to clients.

“The acquisition of a portfolio and development pipeline of the quality of Westfield Corporation is extremely rare, and therefore we believe Simon Property Group would likely have a very close look at Westfield, so can’t rule out a competing offer.”

Major deals are afoot globally, with Brookfield Asset Management looking to buy the portion of mall owner GGP that it does not already own in a $19.5 billion deal.

British mall owner Hammerson this month agreed to buy smaller competitor Intu Properties in a $4.6 billion deal.

The JPMorgan team said the Unibail-Rodamco deal had an implied offer of $10.14, taking into account the spinout of the retail technology platform OneMarket.

On that basis, Westfield’s assets have an implied 4.75 per cent cap rate.

“We have been saying for some time that an implied cap rate in the mid to high 5 per cent level (where it had been trading) was far too high for Westfield, which has among the best retail portfolios globally,” they wrote. “We feel vindicated in our call, but are somewhat saddened at the prospect of losing a great Australian company.”