03:06 PM EST, 01/13/2025 (MT Newswires) -- Investor Bill Ackman proposed that a Pershing Square subsidiary merge with real estate development company Howard Hughes Holdings ( HHH ) , which would be the surviving entity.

Investment firm Pershing Square offered to pay $85 per share for about 11.76 million shares that it doesn't already own in Howard Hughes, for a total amount of $1 billion, according to a letter to the Howard Hughes board. The proposed price represents a premium of 38% over Howard Hughes' stock price on Aug. 5, before Pershing Square expressed interest in taking the company private.

"Ultimately, the lack of recognition by the stock market of (Howard Hughes') accomplishments led to our decision in August of last year to consider taking the company private," Ackman wrote. He is founder and chief executive of Pershing Square Capital Management.

Since then, Pershing Square has received feedback from shareholders who want to remain long-term investors. Ackman said that informed the firm's thinking in its new proposal to keep Howard Hughes public while becoming a "larger permanent owner" of the real estate company.

The new proposal offers a "highly attractive cash alternative for shareholders who choose to exit" while accommodating investors wanting to hold their positions, he said. As part of the deal, Pershing Square would commit to maintaining Howard Hughes' New York Stock Exchange listing.

Shares of Howard Hughes climbed 10% in afternoon trade. The company did not respond to a request for comment from MT Newswires. In the letter, Ackman said Pershing Square plans to keep Howard Hughes as a permanent holding.

The proposal includes a simultaneous $500 million stock repurchase that would be conducted by Howard Hughes at $85 per share for up to 5.88 million shares, which Ackman said would be financed through newly issued bonds.

If the deal goes through and eventually closes, Ackman would become CEO of Howard Hughes while the company's existing management team, including CEO David O'Reilly, would manage the company's principal real estate subsidiary, Howard Hughes Corp.

Price: 78.85, Change: +7.07, Percent Change: +9.85