Activist investors from Unibail-Rodamco-Westfield, Europe’s largest shopping center owner, blocked the company’s plans for a € 3.5 billion capital raise and won seats on its board board after a deadly battle.
The heavily indebted owner of upscale shopping malls such as London Westfield and Carrousel du Louvre in Paris said on Tuesday that 61.6% of voting shareholders supported the proposed rights issue, but it was not the necessary two-thirds upon adoption. .
Activist countryside against the proposed fundraiser stood out because its executives were not aggressive US hedge funds, but rather members of the generally warm-hearted business elite in France: telecommunications billionaire Xavier Niel and Leon Bressler, who led Unibail itself for 14 years until 2006. Together they hold 5.1 percent. shares in the group, and both will now join the board of directors, with a third ally.
Unibail CEO Christophe Cuvillier told the virtual meeting of shareholders that he accepted the vote, but still believes the company needs to reduce its strong leverage to deal with uncertainty and challenges. risks of the pandemic.
“A new period will begin now with the arrival of activists to the council,” he said. “I hope we can work together in a calm and constructive way.”
A board meeting with the new members will be called in the coming days.
Mr Niel said he was looking forward to entering into discussions with management and the board of directors, as well as having access to more detailed information on Unibail’s situation.
“The euphoria of victory will be short-lived, and now we have to get to work,” said the entrepreneur who built his fortune by founding French broadband and mobile provider Iliad.
Asked if he would push management to resign, Niel explained that Unibail’s statutes require 8 of 12 board members to ratify such a decision, so activists don’t have the numbers by themselves. “The vote was a complete rejection of management’s strategy, so if I were in their shoes I would draw conclusions,” he said.
Mr Niel was elected with 61% of the vote, Mr Bressler 62% and their ally Susana Gallardo with 59%. She is a Catalan businesswoman married to former French Prime Minister Manuel Valls.
A shareholder did ask Mr. Cuvillier if he was going to resign, but he did not respond directly, saying only that “the future of the company was the question, not that of one person or another. “.
The battle for Unibail was a powerful reminder of how the pandemic has shaken the commercial real estate market, causing some tenants to stop paying rent and others to seek lower rates. This left Unibail one of the shortest stocks in Europe with almost 30% of the shares loaned to investors betting against the company, according to IHS Markit data on Bloomberg.
Defeat of planned capital increase eliminates key board of Unibail’s € 9 billion plan to consolidate its balance sheet announced in September, which also included the sale of 4 billion euros of commercial and office buildings in Europe, to save 1 billion euros on the payment of dividends mainly in shares and 800 million euros savings thanks to the elimination or postponement of real estate projects.
The moves were aimed at reducing the company’s € 24 billion in debt, much of which was incurred in 2018 when it bought Australian shopping center operator Westfield for $ 24.7 billion in order to create what at the time was the second largest owner of shopping centers in the world in terms of market value.
Mr Cuvillier said the company would now look for other ways to reduce its debt, such as additional asset sales.
The vote on the capital increase comes a day after US pharmaceutical maker Pfizer and Germany’s BioNTech announced the first positive results of their Covid-19 vaccine trials, pushing Unibail shares up by nearly 25% .
Mr Cuvillier said that “the potential progress towards a vaccine could give us more options to make divestments as it improves sentiment towards the real estate market,” while warning that it was too early to draw any firm conclusions.
Unibail shares were suspended on Tuesday mid-morning in Paris after rising more than 30% to € 56.62. They were valued at € 40 on September 16, just before the announcement of the capital increase plan.