Open Editor’s Digest for free

Rula Khalaf, editor of the Financial Times, selects her favorite stories in this weekly newsletter.

Billionaire investor Bill Ackman said he is seeking to build a “modern Berkshire Hathaway” that controls companies in a bid to turn his hedge fund into a diversified financial giant.

Akman Pershing Square The company on Monday offered to buy millions of shares of stock it doesn’t already own in Texas real estate developer Howard Hughes Holdings, in a deal worth more than $1 billion.

The proposed purchase is part of an aggressive campaign Akman He must reshape his hedge fund, which currently buys minority stakes in listed companies, into a huge financial conglomerate with the ability to compete with powerful private equity buyers and other companies in large acquisitions.

“With apologies to Mr. Buffett, [Howard Hughes] “It will become a modern-day Berkshire Hathaway that will take controlling stakes in operating companies,” Ackman said in an investor letter on Monday, referring to the company built by Warren Buffett.

Pershing Square is seeking to increase its stake in Howard Hughes from about 38 percent to up to 69 percent. The hedge fund offered to pay $85 per share, compared to Howard Hughes’ closing stock price of $71.78 on Friday. Its shares jumped 9.3 percent on Monday after Ackman’s announcement.

Howard Hughes is valuable to Ackman because the investor believes the group’s cash flows, real estate holdings and balance sheet can provide billions of dollars in cash to fund acquisitions.

Under the proposed deal, Ackman will become CEO of Howard Hughes and will also bring in his investment team to identify acquisition targets.

Pershing Square could combine the financial muscle of Howard Hughes with its own money to identify big acquisition targets, according to people familiar with its thinking. The deal requires approval by a majority of Howard Hughes’ minority shareholders.

Last year, Ackman opened Pershing Square to an outside investor for the first time, selling a 10 percent stake at a valuation of $10 billion.

Ackman’s proposed acquisition of Howard Hughes is the culmination of more than a dozen years in which Ackman headed the real estate operator, which was previously a consortium of properties spun off from mall operator General Growth Properties during its financial crisis-era bankruptcy.

During the 2008 crisis, Ackman bought a large stake in General Growth when it collapsed into bankruptcy. Ackman and other investors including Brookfield recapitalized the overall growth and made billions of dollars from the recovery in the real estate market.

In 2012, Ackman exited his investment in the shopping center operator by exchanging his shares for non-retail properties, including large residential communities in Las Vegas, Houston, Hawaii, and other properties in areas such as Manhattan.

These properties had been acquired decades earlier by Howard Hughes, who from the 1920s until his death in the 1970s was one of the most followed businessmen in the United States due to his large stakes in companies including TWA airlines and Hollywood production companies. Toward the end of his life, Hughes acquired vast tracts of property to protect his empire from taxes, which were later acquired by General Growth.

In a 2012 asset swap, Ackman renamed the real estate holdings Howard Hughes in a nod to the mercurial financier and listed the company on the New York Stock Exchange. However, Ackman admitted that the real estate company did not enjoy strong support among shareholders and declined as a public company.

Many of Ackman’s followers have long predicted that he would either merge his hedge fund with Howard Hughes or simply acquire it. After considering a merger proposal, which would have moved Amsterdam-listed fund Pershing Square Holdings’ headquarters back to New York, Ackman found the deal unworkable and instead built a consortium of employees and outside investors to acquire a majority stake in Howard Hughes.