Frank Lowy Went All Scorched Earth On The $70 Billion Westfield Restructure Yesterday

Hulton Archive / Stringer

You don’t build a business empire and become a billionaire by being a shrinking violet and Westfield boss Frank Lowy was at his aggressive best yesterday as the $70 billion Westfield restructure went down to the wire.

Yesterday’s pre-meeting count of proxy votes suggested that the deal, hanging on the vote of the associated Westfield Retail Trust (WRT), was set to fail by the tiniest margin, 74.1% against the necessary 75%.

So Lowy and the board of the Westfield Group took the scorched earth option.

Lowy told the Westfield Group meeting yesterday morning, held before the WRT meeting later in the afternoon, that Westfield Group could go it alone if the WRT vote failed.

If the WRT meeting this afternoon does not approve the proposal, it will not diminish our determination to proceed with WDC’s (Westfield Group) strategic objective of separating the two businesses.

We will pursue this separation – but without WRT.

This was, of course, new information which WRT chairman Dick Warburton said was a “material change” and prompted him to adjourn the meeting on the vote later that day.

Interestingly, from a disclosure and governance point of view, the Westfield Group notice issued to the ASX yesterday at 6.46pm confirmed that the decision to take the scorched earth policy was made by the Westfield Group Board the previous evening.

But the information was not disclosed until Lowy’s comments at the Westfield Group meeting.

Australian Shareholders Association representative Stephen Mayne told Lowy at the earlier meeting that this was a “strong-arm tactic” amidst a heated exchange between the pair.

It would be frustrating when a clear majority of voting shareholders, 74.1% in the case of WRT, are in favour of the deal but still tantalisingly short to the required 75%.

We’ll see if the Westfield Group’s approach works better at the next vote of WRT holders in a couple of weeks.

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