Westfield’s Century City in Los Angeles

Unibail-Rodamco SE has agreed to acquire Westfield Corp. in a deal valued at US$24.7 billion, creating one of the world’s largest shopping center developers and operators.

Under the terms of the agreement, security holders of Sydney, Australia-based Westfield will receive a combination of cash and shares in Paris-based Unibail-Rodamco, valuing each Westfield security at US$7.55 and representing a premium of 17.8% to Westfield’s closing security price on Dec. 11, 2017. The deal implies an enterprise value for Westfield of US$24.7 billion.

The transaction has been unanimously recommended by Westfield’s board of directors and Unibail-Rodamco’s supervisory board.

Unibail-Rodamco said a combination with Westfield is a “natural extension” of its strategy to own and operate high quality large shopping destinations in wealthy capital cities. The acquisition will mark Unibail-Rodamco’s entry into the U.S. market.

The merger will create a global retail property leader with US$72 billion of gross market value. The combined entities will own a platform of 104 retail centers across 27 European and U.S. markets. About 22% of its holdings by gross market value will be in the U.S. with properties in Seattle, San Francisco, Southern California, Chicago, New York and Annapolis.

The portfolio includes malls in such cities as London, Los Angeles, Munich, New York, Paris, San Francisco, San Jose, Stockholm, Vienna, Madrid and Warsaw. Net rental income was approximately US$2.6 billion for the 12 months ended June 30, 2017.

The combined firms development pipelines totals about US$13 billion, with developments in London, Milan, Hamburg, Brussels, Paris, San Jose, Lyon and other cities.

Unibail-Rodamco has earmarked approximately U.S. $3.5 billion of the 104 assets to be disposed over the next several years.

Christophe Cuvillier, chairman and CEO of Unibail-Rodamco, will be the group CEO, and Colin Dyer, chairman of Unibail-Rodamco’s Supervisory Board, will be the group chairman.

“All of us at Unibail-Rodamco have immense respect for what the Lowy family and the Westfield team have accomplished with the Westfield brand and the company’s iconic collection of world class shopping destinations,” Christophe Cuvillier, chairman of the Management Board and CEO of Unibail-Rodamco said in a statement announcing the agreement. “We believe that this transaction represents a compelling opportunity for both companies to realize benefits not available to each company on a standalone basis, and creates a strong and attractive platform for future growth.”

The group will have its headquarters in Paris and Schiphol (Netherlands), with two regional headquarters in Los Angeles and London, and will retain its status as a Dutch REIT.

Deutsche Bank and Goldman Sachs are providing US$7.2 billion in committed acquisition financing facility to cover the cash portion of the offer, refinancing requirements at Westfield and Unibail-Rodamco and transaction costs.