It is said that retail giant Westfield Group (ASX: WDC) and its founding family, the Lowys, have no intentions to re-examine their plans to split the global portfolio in two, despite the fact the plan hasn't much impressed investors.
The deal proposed by the Lowys early in December, would see Westfield's domestic and international assets split, which the company said would allow each to focus on their respective growth and funding. Westfield Retail Trust (ASX: WRT) would be rebranded as Scentre Group and would hold the company's Australian and New Zealand assets, becoming Australia's largest real estate investment trust. A new company to be known as Westfield Corporation would also be formed to include all of Westfield's UK and US assets.
Investors initially reacted positively to the deal, sending share prices skywards on the day of the announcement, but they have performed poorly since, due to the lack of detail and transparency of the proposal. Investors and analysts have had to come up with their own numbers and figures, while Westfield has said that more clarification will be provided in the explanatory memorandum and independent expert reports. The memorandum will likely be released in April.
In order for the proposal to pass, Westfield requires 75% support in its favour. At this stage, there is a very real possibility that the deal could fall through due to the current lack of understanding and clarity. For instance, UniSuper, which is Westfield Retail Trust's largest Australian investor with a 7.27% stake, has said that "on the information we have at this stage we would not vote in favour (of the split)".
Foolish takeaway
There is logic behind the proposal in that both groups could focus on funding their own growth stories. In order to sell the split however, greater transparency will need to be provided and the deal may need to be sweetened for Westfield Retail Trust investors.
