Westfield's restructuring D-Day arrives

A proposed split of shopping centre giant Westfield's Australasian and international assets into separate entities will face stiff opposition when securityholders vote on the matter.

Westfield Group wants to merge its Australian and New Zealand business with those of the separately listed Westfield Retail Trust (WRT) to create a new entity, Scentre.

Separate shareholders meetings of Westfield and WRT are scheduled for today, with The Australian Financial Review reporting 25.3% of the roughly 80% of votes already cast by WRT shareholders are "no" votes, according to industry sources.

The Australian reports that Westfield has considered pulling the vote on the merger following early indications from fund managers of shareholder resistance.

Westfield needs to secure the support of 75% of shareholders who vote in order to be successful.

WRT, which was spun off by Westfield Group in 2010, is a joint owner of the Australasian shopping centres.

Westfield Group's international business, which includes malls in Britain and the United States, will become Westfield Corporation.

Westfield believes the split creates more value for investors by allowing the two new entities to pursue their own strategies.

But the Australian Shareholders' Association (ASA) considers the proposed split favours Westfield Group to the detriment of WRT investors.

ASA Chairman Ian Curry said the group could be the difference between success and failure for the Lowy family today.

"We think we can be the difference," he told The Australian.

"We do know that in some cases our for or against vote can swing the result."

UniSuper, which holds 8.5% of WRT, has publicly opposed Westfield's proposal, and it is believed that its position has not changed.

If the merger proceeds, Scentre will obtain ownership of Westfield Group's Australasian retail operating platform.

The operating platform handles property management, leasing, design, development, construction, marketing and funds management. It has been valued at $3-$3.5 billion.

Independent experts appointed by Westfield Group and WRT have said the split would be in the best interests of securityholders.

But some analysts believe the expanding international entity has greater long-term growth opportunities than the mature Australasian operations, and that the merger terms favour Westfield Group.

Earlier this month, Westfield Group sweetened the merger terms for WRT securityholders by reducing the net debt contributed by Westfield Group in the formation of Scentre by $300 million.

Westfield Group said the adjustment improved Scentre Group's financial position and increased net assets.

Westfield Group chairman Frank Lowy, who co-founded Westfield in the late 1950s, will become chairman of both new entities, raising questions over whether the new entities will be totally independent.