Westfield Old Orchard Owner Sold In Megamall Merger

SKOKIE, IL — The parent company of Old Orchard shopping center has agreed to sell itself to Unibail-Rodamco, Europe's largest real estate investment trust, for nearly $16 billion in a deal that combines two of the world's largest mall operators. If approved by investors and regulators, the combined companies would own 104 malls in the US and Europe worth more than $61 billion, according to an announcement of the proposed deal.

The merged mall landlords would own the most popular shopping centers in such major markets as London, Los Angeles, Paris, Madrid, New York and San Francisco, as well as 50 other markets. The proposed sale price of $24.7 billion including debt, is 17.8 percent higher than Westfield's last closing price and was approved by the boards of both companies.

Headquartered in Paris, Unibail-Rodamco was formed a decade ago by the merger of a French and Dutch companies. The purchase of Westfield would mark its first foray into the U.S. market. Following the announcement of the deal, it said it would rebrand its 69 malls with the Westfield logo.

So what does it mean for Westfield's Old Orchard location?

"I think we can just sort of expect business as usual for the time being," said Arif Shah, a spokesperson for Unibail-Rodamco. "From our perspective, Westfield's done a great job at creating these shopping destinations – which is why we've bought them – and they're clearly working well."

Westfield was founded in 1959 by the Australian-Israeli billionare and Holocaust survivor Frank Lowy, whose family still owns 9 percent of the Sydney-based firm.

Lowy will retire from his position as chairman, but he will chair a new advisory board and one of his sons will join a supervisory board of Unibail-Rodamco according to the announcement of the deal. It if goes through, his family will wind up with 2.8 percent of the combined company and $527 in cash.

He described the deal as the "culmination of the strategic journey Westfield has been on since its 2014 restructure" and said he "could not imagine a better home" for the assets he has built over his career during a webcast announcing the deal.

It's the largest ever takeover of an Australian company, according to Bloomberg, which noted that Unibail-Rodamco's share price fell by its largest amount in more than a year following the announcement of the deal. Westfield's shares have fallen in value by 9.4 percent so far this year, which would make it the company's worst year since 2011.

The shadow of online retailers looms over the deal, as declining mall sales due to Amazon and others have deeply disrupted the retail property market in recent years.

According to the Wall Street Journal, Unibail-Rodamco is "betting the equivalent of its entire equity value" that "the megamall has a future despite the encroachment of e-commerce."

Shareholders and regulators are expected to rule on the transaction toward the middle of 2018, according to Shah.

_{Top photo: 2015 file photo of The Cube at Westfield Old Orchard Shopping Center, Skokie | Credit: Jean-Marc Giboux | AP Images for Pampers at Walmart | Associated Press}