Howard Hughes Holdings closed its acquisition of Vantage Group Holdings for about $2.1 billion, paying with cash on hand plus $1 billion of non-voting exchangeable perpetual preferred stock issued to Pershing Square Holdings.
The deal moves Howard Hughes from a real estate-focused company further into insurance. Vantage, founded in 2020, has grown into a specialty insurer and reinsurer with a global property-and-casualty portfolio. Howard Hughes said the acquisition will serve as the cornerstone of its shift into a diversified holding company.
The financing structure gives Howard Hughes the right to repurchase the preferred stock at the end of each of the first seven years after closing. The repurchase price would be the greater of the original issue price plus 4% annually, compounded daily, or 1.5 times buyer book value, adjusted for the preferred’s ownership percentage.
Pershing Square will manage Vantage’s investment portfolio without fees. Howard Hughes said no additional investment management or advisory fees will be paid for that role, and the portfolio will be invested in cash, short-term Treasurys and common stocks, subject to rating agency and regulatory limits.
Howard Hughes said the acquisition will add a faster-growing insurance operation and broaden its long-term sources of value. It also said the holding-company structure should strengthen Vantage’s credit profile and underwriting flexibility. The market has reacted to these announcements by moving the company's shares -0.2% to a price of $65.13. Check out the company's full 8-K submission here.
