Why Unibail's (ASX:URW) $15 billion reset plan could come unravelled

After initially tanking on the announcement of its $14.9 billion reset plan, Unibail's share price rocketed higher. Now the plan's in doubt.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Just over a month ago, on 17 September, Unibail Rodamco Westfield (ASX: URW) released the details of its ambitious reset plan.

In order to reduce its sizeable debt pile, the commercial real estate behemoth's 9 billion euro (AU$14.9 billion) plan includes the intent to complete 4 billion euros worth of office and retail asset sales by the end of 2021.

While that and other parts of the plan remain intact, Unibail's 3.5 billion euro capital raising, which it intends to use to immediately pay down its debt obligations, could be in jeopardy.

As the Australian Financial Review reports, a "group of activist investors, including French telco billionaire Xavier Niel, is determined to derail" the capital raising.

Together the activists hold a 4.1% stake in the company. And they're encouraging other shareholders to vote against the capital raising at the 10 November meeting. Advocating "Refocus not RESET", the group wants to see Unibail sell its US assets rather than issue more shares.

In an online post, the activist group commented: 

URW's problems are primarily a consequence of its acquisition of Westfield in 2018. Since the transaction's announcement on 12 December 2017, the company's share price collapsed 86%… The transaction was the wrong move, at the wrong time and at the wrong price. Moreover, it burdened the company with debt, distracted management and was a gross misallocation of resources… Consequently, URW entered the Covid-19 pandemic and ensuing crisis in a weakened and vulnerable position. It has since been disproportionately affected.

What does Unibail Rodamco Westfield do?

Unibail counts among Europe's largest commercial real estate companies, owning retail and office complexes. It has assets in Europe, the United Kingdom and the United States of America.

Unibail acquired Australian shopping centre operator Westfield Corporation, created by the split of Westfield Group, in 2018. This saw Unibail shares first listing on the S&P/ASX 200 Index (ASX: XJO).

How has Unibail's share price responded since it announced the reset plan?

On the day it announced the reset plan, Unibail's share price slid to 52-week lows. And it kept on sliding, losing 20% from 17 September through to 2 October.

Since then the share price has turned around sharply, up more than 38%. That puts the share price up 5% from where it was on 16 September, the day before the reset plan was released.

With that in mind, the French activist investors may find less support from Unibail Rodamco's other shareholders to block the planned capital raising than they're hoping.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

a graph indicating escalating results
Broker Notes

Why this buy-rated ASX energy share is tipped to more than double in 2026

A leading broker expects this rebounding ASX energy stock to rocket 104% in 2026. But why?

Read more »

Delighted adult man, working on a company slogan, on his laptop.
Broker Notes

Buy, hold, sell: CSL, Pinnacle, and Telix shares

Let's see what analysts are saying about these popular shares right now.

Read more »

A target on a red background surrounded by white arrows pointing to it, indicated share price rises on or exceeding their target
Opinions

A rare buying opportunity in 1 of Australia's top shares?

This sell-off is a great buying opportunity.

Read more »

Contented looking man leans back in his chair at his desk and smiles.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

Three small children reach up to hold a toy rocket high above their heads in a green field with a blue sky above them.
Growth Shares

These 4 ASX 200 stocks could jump another 70% to 80% in 2026

These stocks are expected to rocket higher.

Read more »

Two excited woman pointing out a bargain opportunity on a laptop.
Share Gainers

3 ASX 200 stocks jumping higher in this week's falling market

Investors shrugged off the broader market retrace and piled into these three ASX 200 stocks this week.

Read more »

A woman with a sad face looks to be receiving bad news on her phone as she holds it in her hands and looks down at it.
Share Fallers

Why EOS, Lotus Resources, REA, and Web Travel shares are dropping today

These shares are ending the week deep in the red. But why?

Read more »

A businessman looking at his digital tablet or strategy planning in hotel conference lobby. He is happy at achieving financial goals.
Share Gainers

Why Brambles, HMC Capital, ResMed, and Rio Tinto shares are rising today

These shares are avoiding the selloff and are pushing higher on Friday.

Read more »