UPDATE 3-Ackman drops push for sale of mall operator

Thu Jan 3, 2013 5:07pm EST
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* Decision to back off hinged on Simon's failure to bid

* Pershing Square returns to being passive investor in GGP

* Decision comes as Ackman engages in high profile dispute with Herbalife

By Svea Herbst-Bayliss and Sagarika Jaisinghani

Jan 3 (Reuters) - After months of trying to play matchmaker between the two largest U.S. shopping mall operators, activist investor William Ackman reversed course on Thursday, saying he is no longer pushing for a sale because one party didn't want to buy.

Since late August, Ackman has argued publicly and often that No. 1 mall operator Simon Property Group (SPG) should bid for slightly smaller rival General Growth Properties (GGP), the second-largest mall operator after Simon first made noise about a possible bid for GGP in 2011.

But with no signs of a deal, Ackman, whose $11 billion Pershing Square Capital Management owns an 8 percent stake in GGP, declared himself satisfied with the status quo and said he would return to being a passive investor.

Ackman is retreating on the mall operators at a time he is devoting fresh energy to other assets in his portfolio and the decision may foreshadow an eventual exit from GGP.

"The announcement this morning makes sense because Bill Ackman has been making a lot of headlines lately and sometimes it is good to be seen in a quieter light," said one investor in Pershing Square who did not want to be identified because the fund is private. "You can only push an investment thesis so far, and I suspect that reading between the lines here, Ackman is beginning to prepare to try and get out of this name as smoothly as possible," the investor added.   Continued...