Westfield's European suitor Unibail could be forced to increase its offer for the shopping centre owner that values it in excess of $30 billion or face competition from another bidder, according to analysts.
Analysts at Macquarie and Citi have flagged a potential rejig of Unibail's offer for Westfield after a fall in Unibail's share price since the bid was announced, and fluctuations in the value of the Australian dollar against the US dollar.
In December, Westfield announced the French-Dutch retail landlord had lobbed a $US15.8 billion takeover offer for the Australian-domiciled group that owns malls in the US and UK.
The offer has been recommended by the board and company founder and chairman Frank Lowy.
Unibail has offered Westfield investors a cash and scrip deal under which Westfield shareholders will receive 0.01844 Unibail shares for each Westfield share and $US2.67 cash for each share.
At the time of the bid Unibail's shares were trading at EUR224.10. Since the deal was announced the European landlord's shares have fallen to EUR204 as its investors grow nervous about the US retail apocalypse and its flow on effects to retail landlords.
This, along with a change in the value of the euro against the US dollar since then, implies that the original $US15.8 billion offer for Westfield is now worth around $US400 million less than when the offer was first made.
On an Australian currency basis the deal has worsened further, from an original $10.01 per share to around $9.07 per share, according to analysts from Macquarie.
The shift has sliced nearly $2 billion from the Australian dollar value of the offer which is now valued at around $19.13 billion from $21.07 billion previously.
The changes have helped to keep a lid on Westfield's share price, which had originally soared to $9.66 when the deal was announced in mid December. Its shares closed on Thursday ahead of the Australia Day long weekend at $9.14.
Macquarie analysts said that once the deal was adjusted for distributions it was actually worth $8.93 per share, which is well below the investment bank's going concern net asset value of between $9.39 to $9.69 at a time when cap rates were compressing.
"We therefore believe there could be pressure for Unibail to come up with a more compelling offer or an interloper could be involved in the process," the Macquarie analysts said.
They also said that they do not believe the $US150 million break fee (which translates into 9 Australian cents per share) as a "material impediment" to another party.
But the investment bank noted that most international real estate investment trusts would not have the capacity to outbid Unibail.
"This means any further proposal would likely be with a capital partner with a low cost of capital, we believe," the Macquarie analysts said.
Separately, analysts from Citi said while they still believed the most likely outcome was the deal would go ahead as agreed, the risks appeared to be increasing.
"Since the announcement, movements in Unibail's share price and foreign exchange have reduced the value of the bid fairly substantially," Citi analyst David Lloyd wrote in a note to clients.
"This arguably makes the bid less appealing (a negative) while also increasing the likelihood of an interloper entering the fray (an incremental positive, to the extent that price was a limiting factor)," he said.
Westfield spun off its Australian malls into Scentre in 2014 in a deal that was sweetened after investors baulked.