Westfield’s restructure plan held up
The Lowy family has suffered a setback to its plans for a $70 billion restructure of Westfield following a revolt from small investors in its managed trust, who accused the shopping mall barons of using strong-arm tactics to get a crucial vote to go their way.
A meeting of Westfield Retail Trust (WRT) shareholders was adjourned suddenly on Thursday before the final outcome of a vote on the restructure was known.
Another vote is planned to be held within a fortnight.
The move followed a warning earlier in the day from Westfield founder and chairman Frank Lowy, who vowed to press ahead with plans to split Westfield’s Australasian and global businesses regardless of the whether WRT shareholders supported the deal.
Under the restructure plan, Westfield’s Australian and New Zealand businesses would merge with WRT to create a new entity, to be called Scentre.
Westfield Group’s international business, which includes malls in Great Britain and at the World Trade Center in New York, would become Westfield Corporation.
But the board of WRT considered the warning from Lowy to be a “material change” in the outlook for its investors, and they should have more time to consider the restructure plan, which was approved at a separate meeting of Westfield Group shareholders earlier on Thursday.
The surprise development came after shareholders in WRT appeared set to reject the overall restructure plan.
Steven Lowy, a director on the WRT board and Westfield Group board, said the decision to adjourn the meeting was the right thing to do.
“What’s the downside in giving another 10 to 14 days to consider this important proposal?” he said.
But Stephen Mayne from the Australian Shareholder’s Association (ASA) said the board should not have delayed a vote on the restructure plan, calling the adjournment “outrageous”.
“They lost the vote and shifted the goalposts,” Mayne said.
“The independent directors should not have voted like that. It’s a sorry tale all round.”
Mayne earlier in the day criticised Frank Lowy after the 83 year old billionaire said a rejection of the the restructure plan by WRT “would not diminish our determination to proceed with Westfield Group’s strategic objective of separating the two businesses”.
Mayne accused Lowy of trying to strong arm WRT investors, adding that his revised proposal to push ahead could devalue WRT by creating a competing investment vehicle.
In a fiery Westfield Group meeting on Thursday morning, Mayne said Lowy had run an “oppressive” campaign to get the deal across the line.
“It’s oppressive and it shouldn’t be happening,” Mayne said to Lowy.
Lowy responded by telling Mayne he was living in “dreamland”.
“Your characterisation is absolutely wrong,” Lowy said.
“You’re in dreamland to say this is being done in an oppressive way.”
Mayne later said Lowy was out of line to tell shareholders he would pursue the split regardless of the WRT vote, even before the result was known.
“I’m suggesting he’s tying one last desperate attempt to strong arm Westfield Retail shareholders to accept an unattractive offer,” Mayne said.
Westfield had needed support from 75 per cent of investors in each company to push ahead with the restructure.
While 98 per cent of Westfield Group investors gave the nod to the plan, only 74.1 per cent of proxy votes cast by WRT investors.
Shares in Westfield Group and WRT remain in a trading halt.
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