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Ackman, Brookfield reach truce on U.S. mall spat

Bill Ackman, CEO of hedge fund Pershing Square.


Bill Ackman's heated battle with Brookfield Asset Management Inc. over the fate of one of the biggest U.S. shopping mall companies appears to be over, with the two sides reaching an agreement.

Mr. Ackman's New York hedge fund, Pershing Square, is selling warrants that carry the right to buy more than 18.4 million shares of General Growth Properties Inc. to Brookfield, for about $271.9-million (U.S.).

Mr. Ackman, a well-known activist investor, still owns nearly 8 per cent of General Growth Properties, but has agreed for the next four years to keep his ownership level below 10 per cent. He has also agreed to limits on his ability to team up with others to push for change.

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In turn, Toronto-based Brookfield has agreed that for the next four years it will limit its right to vote shares in excess of 38.2 per cent of General Growth's stock on any potential takeover, and that it will not exceed a 45-per-cent ownership cap.

Brookfield is giving Chicago-based General Growth's board of directors 30 days to buy the warrants that it has just bought from Pershing Square, at the same price that it paid.

"Both sides got what they wanted," Alexander Goldfarb, an analyst with Sandler O'Neill & Partners LP in New York, told Bloomberg News. "Brookfield had to pay a premium to buy the warrants from Pershing Square, so that's a victory for Pershing. And Pershing got Brookfield to amend its corporate governance."

The truce comes after an increasingly acrimonious battle that began last summer when Mr. Ackman (who successfully pushed for a new CEO and directors at Canadian Pacific Railway Ltd. last year) accused Brookfield of trying to win General Growth by way of a creeping takeover, while stymieing the ability of rival firm Simon Properties to do a deal.

Spokesmen for Brookfield and General Growth declined comment Thursday, and Mr. Ackman could not be reached. The deal was struck on Dec. 31 and was made public Thursday in a regulatory filing.

Mr. Ackman had been turning up the heat late last year, telling an audience of investors in New York in October that Brookfield's conduct was "incredibly upsetting," and that the idea that the firm was interested in unlocking the long-term value of the mall company was "a bunch of crap."

Brookfield and Mr. Ackman worked together to rescue General Growth from bankruptcy two years ago. But the two shareholders had differing visions after that, with Mr. Ackman pressing for General Growth to sell itself.

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