What: Shares of Westfield Group (ASX: WDC) and Westfield Retail Trust (ASX: WRT) have today emerged from a trading halt and are both trading in the red. Westfield Group's shares are down 5c or 0.5% while Westfield Retail Trust has fallen 4c or 1.2% to be trading at $3.20 with even more uncertainty now lingering over the controversial merger proposal.
So what: Shareholders of both entities gathered at their respective meetings yesterday to vote on the company's latest restructure plans. Under the proposal, Westfield's international and domestic assets would be split whereby Scentre Group would own and operate the New Zealand and Australian centres. Meanwhile, the US and UK malls would be owned by Westfield Corporation.
While Westfield Group shareholders largely supported the deal (roughly 97% voted in favour), only 74.1% of Westfield Retail's proxy voters said "yes". An approval rate of 75% was needed to get the deal over the line.
Instead of risking defeat, the vote has now been adjourned for up to two weeks which will give shareholders even more time to reflect.
Now what: It seems that when the rescheduled vote is held, there are three possible outcomes:
Firstly, there is always the possibility that the deal will once again be sweetened for Westfield Retail Trust investors to better ensure a "yes" vote is given.
Secondly, Westfield Group's chairman Frank Lowy has said that even if shareholders do not vote in the proposal's favour, the Group would demerge its Australian and New Zealand operations anyway. This would be even less appealing for Westfield Retail Trust than the current terms of the deal. To avoid this alternative, many of the WRT shareholders who voted "no" may change their vote to "yes".
The third outcome is essentially the opposite of the second outcome. One investor yesterday described Lowy's actions as a "corporate disgrace" which could see more shareholders vote "no". The likelihood of this outcome could be exacerbated by investors' frustrations at the company's constant restructurings – the most recent of which occurred in 2010.
A far better option than Westfield
Westfield is a quality company and I am quite bullish on their operations, however, I don't think now is the right time to be buying given the drama unfolding. Until then, there is a company I am far more interested in which could give rise to incredible returns over the coming years.