French commercial real estate giant Unibail-Rodamco has agreed to acquire Westfield Corp. for $15.7 billion in a major consolidation of mall operators that reflects the shift of consumers from physical stores to online shopping.
The Lowy family, which owns 9.0 percent of Westfield, said they would rather be investors than executives after putting in a combined 145 years at the company, which has stakes in 18 suburban USA shopping centers, three of which it wholly owns.
Under the terms of the agreement, Westfield security holders will receive a combination of cash and shares in Unibail-Rodamco, valuing each Westfield security at a price of $7.55 and representing a premium of 17.8% to Westfield's closing security price on December 11, 2017.
Westfield has been viewed as a pioneer in USA mall redevelopment, focusing on luxury properties rather than lower-end malls located in less affluent locations where hundreds of stores have been shuttered.
The deal will allow Unibail-Rodamco to expand into, "new attractive real estate markets", Christophe Cuvillier, chief executive of Unibail-Rodamco, said in a statement. "It adds a number of new attractive retail markets in London and the wealthiest catchment areas in the United States".
Founded by billionaire Frank Lowy, Westfield began in 1959 with one shopping mall in the outer suburbs of Sydney and has grown to become one of the world's largest shopping center owners and managers.
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"We started small and we took Westfield to the world". Frank Lowy, chairman and cofounder of Westfield, will step down but keep a 2.8 percent stake of the combined business, Reuters reported.
"Westfield has been seen as a pioneer in USA mall redevelopment, melding traditional mall retailers with atypical mall fixtures like upscale food courts, high-end restaurants, bars, cinemas and boutique fashion outlets", write Reuters's Byron Kaye and Sonali Paul.
The deal was recommended by the boards of both companies but is subject to approval by shareholders and regulators.
Shares in Unibail-Rodamco, which was formed in 2007 by the merger of France's Unibail and Dutch-based Rodamco, were down 4.0 percent at 1500 GMT, with analysts at Kepler Cheuvreux saying that the deal looked expensive.
Lowy said: "The transaction announced today is the culmination of the strategic journey Westfield has been on since its 2014 restructure".
His sons, Peter Lowy and Steven Lowy, are co-chief executives of Westfield, which spun off its Australian and New Zealand assets in 2014 into Scentre Group.