Why did Frank Lowy sell out of Westfield?

Ross Greenwood speaks to The Australian’s business columnist John Durie following Sir Frank Lowy’s Westfield Corporation (ASX:WFD) decision to sell out to international retail Unibail-Rodamco in a deal worth $32.7 billion (AUD)

Introduction: Why did Frank Lowy sell out of Westfield?

Ross Greenwood:  As we get away tonight one of Australia’s most well, incredible stories in some ways is actually almost playing out to a bit of an ending and that is Sir Frank Lowy. Nodded only last week by Queen Elizabeth in London. Here in Australia, Frank Lowy, the man who created Westfield which became one of the largest shopping Santa Anna’s anywhere around the world, arrived in Australia a penniless immigrant in 1952.

The interesting thing about his history was having been born in Czechoslovakia, grew up in Hungary, basically survived the Nazi regime. Although his father was taking away from the family when he went off to buy train tickets and then ultimately, never came back. Subsequently, it was discovered that he was beaten to death, Hugo Lowy as soon as he arrived for not giving up a pray mate.

Now, ultimately, when he came to Australia, he set up a small delicatessen and a small goods delivery business with another Hungarian immigrant who’d survived the Holocaust, Joan Saunders. Together, they not only set up a delicatessen but then started doing some property development which ultimately created the Westfield Shopping center businesses that became so large.

Well, today, the Lowy family is effectively selling out of Westfield. Previously, they had sold at most of their interest in the Australian shopping centers a list of entity owns those now called Santa group. The Lowy family has a very small interstate. They’d retired an interest in Westfield internationally and today, the giant retail company Rodenko has boarded at that business for $25.7 billion.

It means, a business will ultimately have more than 100 full malls in 27 retail markets around the world, you can say.

Frank’s also pretty Kenny is well. He knows a retail deal when he sees one. He’s been in that a few times. This interesting to cite what it says about the future of retail here and around the world. This is Frank Lowy, just a few minutes ago from his media conference.

Frank Lowy: The essence I’ve spent my life building, I could not imagine a better home for them than in this new company. I’ll spend time with Rodenko chairman Collin and Chief Executive, Christoph who lead the team of our standing executives. I’ve great confidence in their leadership qualities and their ability to lead the company in this new phase.

Ross Greenwood:  We should also say there have been highs and lows in Sir Frank Lowy’s career. There’s no doubt. Such as he dropped $300 million when he bought into the Channel 10 Television Network in the late 1990s. There was also allegations during his working life of tax avoidance, he claimed that some $68 million had actually been shipped to Israel in the form of charitable donations.

But there was also even his relationship as he went through with key politicians, particularly, in Israel the then Finance Minister Olmert, who then became ultimately the Prime Minister, Ehud Molda Olmert. Now, there were investigations into both Lowy’s contributions to Olmert’s regime and also Olmert himself. As I say, it’s not as though there has not been controversy in Frank Lowy’s career and even then again here in Australia creating the Football Federation of Australia, something that saw Australia for the very first time in several decades qualify for the World Cup. Something we’ve done now for four successive occasions.

Let’s go to John Durie who’s followed Frank Lowy’s career for many years. The business journalist and key commentator for the Australian newspapers online. Right now, many thanks for your time, John.

Interview with: John Durie, The Australian, Business Columnist

John Durie: Hi there, Ross. What a big day in Australia, isn’t it?

Ross Greenwood:  It really is. The fact is he’s been a giant of Australia’s corporate world. The question I’ve got, is Frank Lowy 87 years old? Basically, whether this is something about the future of retail clearly, with the online shopping coming and question marks being put over, bricks and mortar retail around the world?

John Durie: Ross. I think the bottom line is this, he’s 87 years old. He’s in the business stage and they’ve been in their private three big. We’re in the midst of a technological revolution. Within that revolution tightness, I’m not sure and I think even Frank Lowy has no where to go. This is the perfect time to sell. I think that he’s once again shown he penny by getting out now while we’re still trying to work out the next step.

Ross Greenwood:  One thing we should explain to people is that, there has been a genuine mood for merges amongst big shopping centers. They try to get scaled to try and beef up in the face of the online sales. Aren’t they?

John Durie:  They are and ironically, that’s the Rodenko is becoming the I might say but this was the biggest ever. It’s a huge deal. They ironically, now the Capitol of  business and one of the things why Rodenko Westfield is they want to create Francis with supermarkets in the US, Europe, and the UK.

Ross Greenwood:  It’s going to be interesting to watch a John Durie columnist for The Australian newspaper. You can read his comments about this tomorrow but as I say, it is in a story deal and certainly a very significant one for Australia and also the Australian business community. John, we appreciate your time.

John Durie:  Thanks. Thanks Ross.

Ross Greenwood:  John Durie, then you can also watch the Stock Die Up by 11.6000 and 93.1. We’ll try get you a little bit more as to what’s taking place in that media conference. I’ll speak with my colleague from My News, Eddy Myer. Welcome back to my news right around the country. I want to take you back to these media conference being held by Frank Lowy Society. Is a very big corporate story. It’e even the biggest Australian story as well, there’s no doubt.

Do bear in mind that as we speak, the co-chief executives of Westfield Corporation, Steven Lowy and Peter Lowy his sons. Peter runs the US operations. Steven runs the domestic operations here. Also, of course, he’s been in charge of the Football Federation of Australia since his father to. Just a short time ago at the media conference. This is just a little of what Frank Lowy had to say about the future inside this newly created organization.

Frank: This is obviously a day of mixed emotions for me. As I’m 100% comfortable with our decision of interesting that all has been changed. We will move from being executives to being investors. We’re committed to the success of the new company, and we intend to maintain a substantial investment. I’m also proud that Univi will extend the famous brand across all their flagship vessels.

Ross Greenwood: Rodenko, of course, being the company that will buy out the Westfield international business for some $32.7 billion Australian. The other person who did speak here. I think some of the stats are astonishing. Just have a listen to Peter Lowy, that is Frank Lowy’s son the co-chief executive of Westfield Corporation. Paid for years I must admit. He’s just a little of what he said about the history if you were an investor in Westfield.

Peter Lowy: $1,000 that was invested with my dad in Westfield in 1960. At the end of this transaction, would be worth $440 million today. That is a 25.6% compound return every year for the last 67 years. The other interesting thing is that, Westfield shareholders have received some $47.7 billion of returns for dividends and capital returns over and above the equity that was raised.

Ross Greenwood:  Just astonishing. Think about that. What was 1000 bucks net worth $440 million, just incredible. Let’s go to my colleague Eddy Myer from My news who has been covering this and at the media conference as we speak. Eddy, just incredible numbers that were bandied around. What was the emotional aspect of this given the fact that Frank Lowy’s built this business from 1952, 53 give or take when he came here to Australia?

Eddy Myer: Look, it’s been a million. You can still be emotional. Frank as he is now, he was not it just recently. Was in London he was on a video link with some papers just said. Now, this is by any measure an Australian success to take something so small and turn it into something so large, is incredible and given that the Westfield brand will now still be across the globe and even more centers are owned by Unibi Rodenko which in turn becomes the world’s largest shopping center developer and operator. To go from a small store in Sydney’s West Black town to this global empire. You could feel the emotion in his voice as he told us that he was stepping down. It’s the end of an era.

Ross Greenwood:  Like I said, Frank and Peter were in London. Where was Steven Lowy, the other co-chief executive?

Eddy Myer: He’s here in Sydney at the Westfield quarters.

Ross Greenwood:  Okay, and from that point of view, was a business. Was it a matter of some emotions there all men still down in this way?

Eddy Myer:  I think it was business that they had no business when you know them. They will still have a role in this. They’re going to provide advice. They’re going to be on an advisory board helping Unibi Rodenko with the assets maintaining their presence, and their status, and some of the best shopping center developments in the world.

Ross Greenwood:  Just one small thing, Eddy. Did I say anything about whether there was timing in these in regards to the rise of online retail? Whether they believe that, that is something that could detract or take away from the bricks and mortar retailers they’ve been waiting for.

Eddy Myer:  Now, well, I’d to step away to do some reports for nine years tonight. But at one point, Frank said that basically, I’ve been working on these. I’ve been building up to this for the past three or so years, a process that’s now culminated in this is huge deal that they say they’re very happy with it. They’re confident that Unibi Rodenko will not only maintain the assets, but take them to the next level.

I see Frank’s getting on. This is a big deal for him. He’s stepping away, but they will still have an involvement. Just in terms of the deal what it means is, based on what she has closed yesterday, it’s something more like an 18% premium on top of what it closed yesterday in terms of the shares. They’re saying it’s pretty good deal.

Ross Greenwood:  Eddy Myer, my colleague from the news at that media conference that I say, a big thing for the family but also a big thing in many for Australia as well.

 

Recommended

Interviewed  Greg Griffin, Chairman, Adelaide United Football Club titled ” Why did Ange Postecoglou resign? .”

Interviewed  Betty Klimenko, Owner of Erebus Motorsports titled ” Betty Klimenko: First female owner to win the Bathurst 1000 .”

Newsletter – October 13 2017 .

Interviewed  Shane McInnes, Macquarie Radio titled ” Socceroos need a win! .”

Money Minute – August 24 2017 Bosses’ Pay Clipped .

Interviewed  Tim Lawless, Head of Research, Corelogic RP Data titled ” Property gains over the second quarter of 2017 is losing steam .”

Interviewed  Mark Mentha, Korda Mentha titled ” Network Ten expected to be put into receivership .”

Interviewed  Alex Pollak, CEO Loftus Peak titled ” Amazon IPO celebrates 20 yrs – Alex Pollak CEO Loftus Peak .”

 

Previous: 9News: Ride Sharing Rival
Next: Is it about time Uber got some competition?

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

325 More posts in Frequently Asked Question (FAQ) category
Recommended for you
Where are your tax dollars going?

Ross Greenwood speaks to Senior research fellow at the Centre for Independent Studies Robert Carling after...