Today’s result was always going to be a close finish. While the Group needed to gain approval from at least 75% of Westfield Retail Trust’s shareholders, they managed to receive a “Yes” vote from just over 76% of shareholders. The result will see both entities’ local assets merged to form Scentre Group, while Westfield Group’s international assets, mainly in the US and UK, will be split off to form Westfield Corporation.
Of course, there has been plenty of controversy surrounding the deal. Since it was announced on December 4 last year, the market has remained divided over the fairness of the proposal, including its merger ratio, the gearing levels that would be assumed by Scentre and the costs of the Group’s management platform. Other investors have also expressed their frustrations at the prospect of yet another Westfield restructure.
Regardless, the deal will now go ahead and will enable both entities to focus on funding their own developments. It is thought that this will be the best way to maximise shareholder returns going forward. For instance, shareholders of Westfield Group will enjoy the benefits of new developments like the World Trade Centre mall, located in New York, as well as various other UK shopping centres which could prove incredibly profitable in the future.
Following the announcement of the result, Westfield Group’s shares opened from their trading halt up 17c or 1.6% at $10.98 while Westfield Retail Trust is also trading just under 0.2% higher. In comparison, the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is still down 0.4% for the day.
Westfield could prove to be a good investment over the coming years, although I think there are far better alternatives to take advantage of instead.
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