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As billionaires go, Bill Ackman and Brad Jacobs have more than their share of self-belief, views and platforms to share them on. Fund manager Ackman waxes voluminously to 1.6mn followers on X. Logistics entrepreneur Jacobs writes and speaks on how to build financial empires.
But how good are they at persuading public company shareholders? That’s their current test. Ackman’s Pershing Square on Monday announced a $1.5bn offer to buy a majority stake in Howard Hughes Holdings, a Texas real estate developer in which it already owns 38 per cent. On Wednesday, Jacobs launched a hostile $11bn bid for Beacon Roofing Supply.
Both moguls are attempting the same feat: to create publicly listed acquisition platforms from which to flex their dealmaking prowess. Ackman has compared his efforts with those of Berkshire Hathaway boss Warren Buffett. The scene is set for a skirmish between thirsty tycoons and wary investors in would-be targets.
Jacobs’ bidding vehicle, QXO, is an artefact of financial engineering. He bought a tiny, listed technology company which then sold billions of dollars in fresh equity to investors including Donald Trump’s son-in-law Jared Kushner. Today, QXO possesses a $5bn war chest, intended for deals in the building supply sector.
But Beacon Roofing Supply, its first quarry, is not going quietly. QXO said on Wednesday that the company had for months been resisting negotiations, forcing it to launch a hostile public bid. Beacon says that even with its 37 per cent premium to the undisturbed price, the offer is too low.
Ackman’s approach is different. His company, Pershing Square, sees Howard Hughes as a “permanent capital” vehicle on which to construct a Berkshire-like conglomerate. The target’s board is considering his proposal. But analysts at JPMorgan have described the first offer as “light” and at least one shareholder has criticised the price.
Ackman’s Buffett copycat attempts are already numerous. They include a twist on the special-purpose acquisition company which he called “SPARC”, and an attempt to list Pershing Square in New York to raise billions of dollars.
These battles are worth watching, because Ackman and Jacobs will have more ahead. Public markets today rarely offer bargains — and there are countless parties working to ensure market efficiency. Beacon and Howard Hughes will now see hedge funds take large positions in their stocks. Targets’ boards will face pressure to get the best price.
Even if they win, chasing Buffett could be folly. The Oracle of Omaha built his edifice some 60 years ago, when markets were less efficient, capital and information moved slowly, and there wasn’t $2.5tn of unspent private equity capital seeking a home, as S&P estimates there is now. Ackman and Jacobs will need to achieve business immortality the hard way.
sujeet.indap@ft.com
