Real estate developer Howard Hughes is being offered a takeover by Bill Ackman's Pershing Square at a price of $85 per share.

Pershing Square, led by Bill Ackman, is proposing to acquire the remaining portion of the investment firm for $85 per share.

Although we are content with the significant advancements made by Howard Hughes Holdings since its public debut over 14 years ago, we, as long-term shareholders and this board, are unhappy with the company's stock price performance, as expressed in a letter to the Howard Hughes board by Ackman.

Ackman suggested creating a new subsidiary of Pershing, which currently holds approximately 38% of Howard Hughes, to merge with a real estate developer located in The Woodlands, Texas.

The letter stated that stockholders would have the option to receive more than a majority of their merger consideration in cash at $85.00 per share, which represents a premium of 38.3% to the unaffected stock price and a premium of 18.4% to the closing price this past Friday, and the balance in stock of the post-merger company.

In premarket trading, Howard Hughes shares experienced an 11% increase to $79.67 per share following the news. CNBC sought comment from the company.

In November 2010, Pershing invested $250 million in Howard Hughes at $47.62 per share. Over the past 14 years, Pershing's investment has generated a 35% total return, which translates to a 2.2% compound annual return. However, the company has not paid any dividends since its inception, Ackman stated.

In the letter, Ackman stated that the Company's stock price performance was extremely disappointing, especially considering the high regard we have for the board and the superb management team led by David O'Reilly and the nearly one thousand employees at Howard Hughes, many of whom he has known for more than a decade.

Under the proposed deal, Ackman stated that Howard Hughes would remain unchanged and continue to be managed by the current leadership team, led by CEO David O'Reilly.

"Ackman stated that there are no plans to alter the HHC organization, its staff, or its long-term strategy. He added that all current HHH employees would continue to be employed following the Transaction."