Bill Ackman's Pershing Square has agreed to invest $900 million in real estate company Howard Hughes, the companies announced Monday, as the billionaire hedge fund manager looks to follow in the footsteps of Warren Buffett.
The deal involves Pershing Square buying 9 million newly issued shares of Howard Hughes for a total cost of $900 million. The purchase price of $100 per share is 48% above where the stock closed Friday, and puts Pershing's stake in the company at 46.9%.
"Pershing Square's investment will enable HHH to become a diversified holding company by acquiring controlling stakes in high-quality, durable growth public and private operating companies while continuing to invest in and grow the Company's core real estate development and Master Planned Communities business," the press release said.
Shares of Howard Hughes rose 2.9% on Monday after the announcement.
Ackman has said he wants to turn the real estate company into a "modern-day Berkshire Hathaway," referencing Buffett's trillion-dollar conglomerate. In an interview with CNBC's "Squawk Box" on Monday, Ackman called Buffett "one of my most important heroes, certainly in business and I would say in life."
In addition to the investment, Ackman will now become the executive chairman of Howard Hughes' board. Pershing Square's chief investment officer, Ryan Israel, will take on the same title at Howard Hughes.
Ackman told CNBC that it is "highly likely that we will build or buy an insurance company" for Howard Hughes, which would also mirror Berkshire Hathaway.
Going forward, Howard Hughes will pay Pershing Square a quarterly base fee of $3.75 million and a quarterly management fee that is based on changes to its market cap.
The press release also said that Pershing Square will limit its voting power in the company to 40%.