Corporate restructure not the Scentre of attention at Westfield investor day

Investors came away from the day disappointed as they remain in the dark.

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Westfield Group’s (ASX: WDC) investor presentation at Westfield Miranda shopping centre yesterday did little to appease investors’ concerns over its proposed corporate restructure. In fact, the topic was barely addressed by finance director Peter Allen, who instead reinstated the company’s strengths and took analysts on a guided tour of the shopping centre.

Investors had been hoping for a clearer explanation regarding the proposed merger, which would see the Group’s local assets combined with Westfield Retail Trust’s (ASX: WRT) to form the new Scentre Group vehicle, while its international assets would be spun-off into Westfield Corporation. They have largely been kept in the dark since it was proposed on December 4 with a limited understanding of the long-term implications of the deal.

It is widely believed that a large portion of shareholders in the Trust are against the proposal, arguing that the $1.8 billion in management costs they would be responsible for is far too great and should be reduced. Although Allen did introduce a number of the executives that run the business, the move was still unlikely to convince them that the $1.8 billion figure was a fair amount to pay.

Shareholders and analysts will now have to wait for the release of the group’s Explanatory Memorandum, which has been submitted to the Australian Securities and Investments Commission (ASIC) and should be released within the next two or three weeks ahead of the vote expected to be on May 29. Investors in the Trust will be hoping the memorandum will contain a deal that is tilted a little more in their favour, although Bank of America Merrill Lynch thinks that the chances of a sweetened deal are decreasing quickly.

Foolish takeaway

There is certainly logic behind the proposal. By separating its domestic and international assets, both corporations would be better equipped to focus on their own developments and growth stories. However, given its exposure to recovering international markets, Westfield Group is the more attractive of the two companies. Its shares are trading at $10.31 and offer a dividend yield of 5.1%.

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