Saturday, August 20, 2022

Westfield sells to French property giant

The shopping mall magnate has decided to sell to Unibail-Rodamco, the French property giant

Westfield Corporation, the shopping property magnate, has decided to sell to Unibail-Rodamco, the French property giant for $32.7 billion. Unibail-Rodamco will maintain the brand and the Lowy family, which owns Westfield, will continue its commitment to the group as well as a substantial investment in the group. This is a major step for Lowy family, which will result in major benefits for its shareholders. The deal will see Westfield’s shareholders receive $10.01 in cash and shares per share, which is a huge raise from the earlier price of $8.50.

Westfield chairman Frank Lowy said the deal was the result of the company’s restructure that started in 2014. He said that the group sees this transaction as highly compelling for Westfield’s security holders and Unibail-Rodamco’s shareholders alike. He told shareholders that Unibail-Rodamco’s track record makes it the natural home for the legacy of Westfield’s brand and business. Meanwhile, the boss of Unibail-Rodamco, Christophe Cuvillier said the deal will create significant value for all shareholders. Christophe said the acquisition of Westfield is a natural extension of Unibail-Rodamco’s strategy of concentration, differentiation and innovation. It adds a number of new attractive retail markets in London and the wealthiest catchment areas in the United States.

However, Westfield’s retain technology platform, OneMarket, will remain with the group. The platform will be turned into a new company on the ASX and Steven Lowy will continue to be the chairman. Lowy has made several reshuffles in the past decade, under which it hived off its Australian assets into a separate company called Scentre in 2014. This move by Lowy is part of the group’s efforts to focus more on the international corporation.

Westfield Corporation runs 45 shopping centres and airport retail precincts in the US, UK and Italy. It also operates the retail space in the new World Trade Centre in New York.

Mr. Lowy invested close to $180 million of his family’s cash to top up his Westfield Corporation stake during the demerger, taking the family holding in the international group to a little under 10 per cent. Since then, its shares recovered as the US economy began to improve. But after it split from Australian operations, its stock has fallen 10 per cent so far this year.

On the US front, Westfield has suffered from its mall business. With digital shopping taking ground across the US strongly, traditional physical retail shopping has been pushed to the background or terminal decline. This has adversely affected malls, where the physical stores are located, resulting in steep decline in sales for retail outlets located at the malls. This has resulted in the closure of a thousands of outlets across the US. The list includes top retail store like JC Penney, Macy’s, Sears and K-Mart which have reduced their physical presence. While the big names have been able to withstand the sharp developments, smaller ones have been pushed to the limit which includes names such as Payless and RadioShack.

All this had a deep impact on employment as the retail stores located at the malls employed thousands of staff. The closure of malls has resulted in job losses to the tune of 200,000 extra jobs a year. According to the latest Bureau of Labour Statistics, malls provided jobs growth of around 17,000 a month at this time last year, but the trend has suddenly reversed, resulting in an average job loss of 9,000 a month this year.


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