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Westfield reiterates support for French takeover as profit jumps

Australian shopping mall giant Westfield reaffirmed its support Thursday for a takeover by French firm Unibail-Rodamco as it announced a jump in full-year net profit.

The company announced the deal, which would be the biggest-ever corporate takeover in Australia, in December, but since then the cash and scrip offer has lost its premium after a fall in the French property firm’s share price.

Despite this, and reported pressure from some fund managers for it to be sweetened, the proposal continued to have “the full support of the Lowy family (the chief executives) and the Westfield board”.

The backing came as Westfield posted a 13.5 percent lift in annual profit to US$1.55 billion, shrugging off tough retail conditions and competition from online platforms like Amazon.

Revenue in the year to December 31 rose 17.1 percent to US$2.1 billion.

“The performance of Westfield for the year was solid and we remain confident with the strategy of developing and transforming flagship assets,” said joint chief executives Peter and Steven Lowy.

“Over many years we have adapted and improved our portfolio to meet the changing needs of retailers, consumers and brands, and this remains a core strength of Westfield.”

They pointed to the successful opening of a redeveloped Century City in Los Angeles and the expansion of UTC in San Diego, along with progress on expansions at Westfield London and Valley Fair in Silicon Valley.

The decision to sell the business to Unibail-Rodamco comes with mall operators embarking on a consolidation drive as they face increasingly tough competition from online shopping sites.

Unibail-Rodamco is Europe’s largest commercial landlord and the intended purchase comes as it offloads smaller assets in Europe to focus on bigger shopping centres, which are likely to be better suited to fending off the march of e-commerce giants.

Unibail has offered 0.01844 of its shares for every one share of Westfield, plus US$2.67 cash, valuing the company at US$24.7 billion.

At the time it was worth Aus$10.01 per Westfield share, but that has now fallen under nine dollars due to currency volatility and a slump in Unibail’s stock price.

Unibail-Rodamco’s Paris-based chief executive Christophe Cuvillier earlier this week indicated that there would be no increase.

The future combined portfolio of the merged companies would include key centres like Westfield London, Westfield World Trade Center in New York, and the Forum des Halles in Paris.

Westfield said on Thursday an explanatory document setting out the finer details of the takeover would be sent to shareholders in April with a vote expected in the second half of the year.

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