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Brookfield, Ackman falling out was inevitable

Bill Ackman of Pershing Square Capital Management


Brookfield Asset Management Inc. invests over decades. Bill Ackman has a quicker turnaround time, so it's inevitable that the two would clash over the future of the U.S. mall company they are both big owners of, General Growth Properties.

The two teamed up to bring General Growth back from a brush with trouble, which landed the mall operator in bankruptcy protection. The big money has been made in the two years since General Growth came out of creditor protection. From here on out, it's a game of a few per cent a year.

Brookfield has about 40 per cent of General Growth and will likely be just fine with a steady annual return from owning malls for decades to come. That's what it does with office towers, railroads, power dams and any number of other assets.

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Mr. Ackman's game is one of bagging big returns and moving on to something else. He wants a takeover premium for his 10 per cent, likely from Simon Properties, which has talked about the deal before (and competed with Mr. Ackman and Brookfield to own General Growth when it was in restructuring).

So he is asking General Growth's board to shop the company in hopes of a big takeover premium. Brookfield opposes the plan. It has three seats on the board and enough stock that it will be tough to force the Canadian company to do anything it doesn't want to do.

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