BUZZ-Howard Hughes shares surge as Ackman's Pershing Square proposes merger with unit

Updates

** Shares of real estate developer Howard Hughes HHH.N up 9.2% at $78.5 in premarket trading

** Billionaire investor Bill Ackman's Pershing Square PSH.AS, which along with its affiliates, has a 37.6% stake in the company, proposes merger between Howard Hughes and a Pershing unit

** Ackman also says Pershing Square is increasing its stake in Howard Hughes Holdings by $1 billion

** Texas-based HHH has market capitalization of $3.6 billion, according to data compiled by LSEG

** Stock hit a four-month low on Friday, down about 18% from its 2-1/2 year high in November

(Reporting by Medha Singh and Rupali Chaudhary)

((medha.singh@thomsonreuters.com))