Australia's Westfield says 'No Plan B' as Unibail deal shrinks

Australian shopping mall giant Westfield Corp ruled out trying to increase a $16 billion buyout from France’s Unibail-Rodamco SE after a decline in the European firm’s shares drove down the deal’s value, saying there was no Plan B.

The refusal by the world’s No. 4 mall owner to recut the deal may frustrate investors, with analysts estimating they will get A$2.5 billion ($2 billion) less than when the companies announced the offer in December. Unibail’s Paris-listed shares are down 15 percent since the announcement.

“There’s nothing in anybody’s hands today,” Westfield co-Chief Executive Officer Peter Lowy said on an analyst call on Thursday, referring to likely moves in both companies’ stock prices before shareholders vote on the deal in mid-2018.

“There is no Plan B. I would not get drawn on any speculation. We are committed to this transaction,” added Lowy, whose family owns 9.3 percent of the company.

Unibail has also ruled out changing the deal terms in a statement to Australian media this week.

Westfield, owner of World Trade Center in New York, Westfield London and other high profile shopping centres, recommended the takeover in December, with Lowy’s father Frank Lowy then calling it the best possible outcome for the business he started in 1960.

The company, which spun off its Australian assets in 2014, has been overhauling its properties, adding non-traditional fixtures like cinemas and fine-dining precincts as its core retail tenants weather increased competition from online platforms.

But some analysts have interpreted the Lowy family’s decision to sell as an admission that brick-and-mortar retail had peaked.

Peter Lowy stood by the original deal terms as the company booked a 13.5 percent rise in annual net profit to $1.55 billion, helped by upward property revaluations as a result of higher rents brought about by refurbishments.

Net underlying profit, which the company calls funds from operations, rose 2.3 percent to $706.8 million, beating analysts’ average estimate of $679.4 million, according to Thomson Reuters I/B/E/S.

Westfield declared a final dividend of 25.5 cents per share, up from 25.1 cents the previous year.

The company added that it would not give profit or dividend guidance while it was finalising a takeover.

“The lack of guidance may annoy some in the market looking for a more bullish stance from management,” said Evans & Partners analyst Robin Young in a client note.
Westfield shares were flat, in line with the broader market.