Lowys accept $33bn Westfield takeover
International property tycoon Frank Lowy has agreed to sell his business empire to European shopping centre giant Unibail-Rodamco for almost $33 billion in Australia’s biggest takeover, raising doubts over the future of the bricks-and-mortar mall.
The 87-year-old will sell the Westfield international shopping centre empire that spans Britain and the US, with his remaining interest in his Australian malls to be left untouched.
The move comes as the retail sector is battered by internet shopping and the decline of department stores. Although Sir Frank and his family are stepping back from their executive positions, they remain strong believers in the industry and will keep a $US1 billion investment in the merged company.
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Sir Frank, who was knighted by the Queen last Friday, will hand the reins of his 35 international shopping centres to the Paris-based group, which will use the name he first used when developing centres in western Sydney.
“I’m also proud that Unibail will extend the famous red Westfield brand across all their flagship assets … What a privilege it has been to lead this great Australian company, we started small but we took Westfield to the world,” Sir Frank said last night.
Speaking from London, Sir Frank says he has “mixed feelings”.
“I am happy about the decision but I look back at 57 years and it’s bittersweet. It’s time from a personal point of view for me to move on,” he says.
“Today is the second-most important day in Westfield history; (the) first was September 1960 when Westfield was born.”
As sons Peter and Steven, who will also step down from their roles as co-chief executives of the company, looked on, Sir Frank said the takeover had come about after just six weeks of talks.
He described the $US24.7 billion ($32.76 billion) deal as “a good price”.
The family will switch to becoming investors after working at the company for a combined 145 years. “Who would have thought that 57 years ago I would be sitting in snowy London talking to you in Sydney,” said Sir Frank, who was estimated to be Australia’s fourth richest person with assets of $8.3 billion before the deal.
The takeover marks a new era for the global property industry. The deal will see the Australian-listed Westfield’s holdings across Britain and the US combined with the giant European property group to create what has been dubbed the world’s best retail real estate company, with 104 malls in 27 retail markets. Steven Lowy says the group had adapted its malls to changing consumer behaviour. “Unibail-Rodamco has done the same to their portfolio; it really creates an opportunity that is incredibly robust and will definitely be able to adapt to the changes in society that are taking place, Amazon or no Amazon,” he says.
In 2014, the Lowy family recast Westfield, spinning out the Australian properties into the now $23 billion Scentre Group in which the Lowy family has a near 4% stake. Before the takeover bid, the family owned 9.5% of Westfield, worth about $1.68 billion, according to Bloomberg. With the takeover premium the shares will be worth about $2 billion.
I am happy about the decision but I look back at 57 years and it’s bittersweet. It’s time from a personal point of view for me to move on
The corporate deal is a world away from Sir Frank’s humble beginnings. His rise took him to the top of international business, politics, sports and philanthropy. Born in 1930, he survived the Holocaust in Hungary and fought for the Israeli army as the country won independence in 1948. He arrived in Australia in 1952 with a suitcase and little else.
Westfield — founded with another Holocaust survivor, John Saunders — emerged from a delicatessen in Sydney’s west to become one of the largest shopping centre landlords in the world, managing assets worth $US32 billion.
Sir Frank puts down the extraordinary growth of his business to his passion. “I did have a burning ambition to succeed,” he says.
The Westfield deal comes as rival global landlords are undertaking a bout of consolidation that is leaving the biggest names in global shopping centres ever bigger as they focus on developing a new generation of properties to draw in consumers chasing an experience rather than just lower-priced internet goods.
Sir Frank says he has “great confidence” in the management team to lead the combined group.
The deal was in the best interests of both staff and security-holders, he says.
Sir Frank expects other investors to welcome the deal but some are hoping for an even better offer.
BT Investment Management fund manager Peter Davidson says: “In retail terms, this is the best house on the best street so it’s too early to rule out competitive bids.”
This particularly applies to the group’s best British and US centres. Westfield London, covering 17ha, opened in 2008, while Westfield’s other big British centre, Stratford City, opened in 2011.
– with Turi Condon
This article originally appeared on www.theaustralian.com.au/property.
