Shopping centre giant Westfield is to be acquired by France’s Unibail-Rodamco in a deal that will create a $72bn (£54bn) retail property empire spanning Britain, the United States and much of continental Europe.
The deal marks the end of an era for Australian billionaire Sir Frank Lowy, Westfield’s co-founder, who first opened a small shopping centre on the outskirts of Sydney in 1959 after leaving his native Slovakia after the Second World War.
Sir Frank, a Holocaust survivor, and his family own a 9pc stake it Westfield, and if the deal goes ahead will own a 2.8pc stake in Unibail-Rodamco. He said on Tuesday that the family wanted to change its role, adding “we would rather be investors than executives”.
He said the deal was “the culmination of the strategic journey Westfield has been on since its 2014 restructure”. The two businesses are understood to have been brokering a deal since October.
Sir Frank will step down as chairman of the business, while his sons Peter and Steven will also step down as co-chief executives.
Shareholders in Westfield Corporation, which owns malls in White City and Stratford in London, will receive $7.55 per share at a 7.8pc premium, valuing the Australia-listed company at $24.7bn.
A tie-up between Westfield and Unibail-Rodamco is the second major deal in the sector in as many weeks. UK listed Hammerson agreed a deal last Wednesday to buy rival Intu for £3.4bn, immediately becoming the UK’s largest listed property company.
Analysts have speculated that the consolidation in the industry is as a result of competition from online shopping, which has drawn consumers away from traditional malls. By buying up Westfield, Unibail gives itself a ready made portfolio of high-performing centres in market it is not currently in.
John Lee, analyst at Morgan Stanley said: “Concerns around structural headwinds remain, but asset quality should make Unibail-Rodamco materially better positioned than peers, all else equal.”
The combined group will have 104 shopping centres in 13 countries and the two companies said they would make €100m (£88.2m) in savings a year following the tie-up.
The group is expected to sell €3bn worth of assets over the next few years, which will involving shedding some of its smaller shopping centres.
Westfield is headquartered in Sydney, but spun off its Australian shopping centres in 2014. It has also sold malls in Tunbridge Wells, Derby, Guildford, Belfast, County Down and the West Midlands in recent years, leaving it with just the two London locations. It also has more than 30 shopping centres in the US and is building a new site in Milan.
Unibail owns 71 shopping centres across continental Europe, including Paris’s prominent Forum Des Halles, and plans to rebrand its flagship properties under the Westfield banner.
Westfield employed 523 people in the UK as of last December and is currently working on a new shopping centre in Croydon, south London, which is not expected to be threatened by the deal.