The Westfield demerger is a brilliant deal for shareholders in the Westfield Group, not to mention the Lowy ruling family and its phalanx of advisers. For investors in Westfield Retail Trust, however, the proposal is not so rosy.

The issue is price. This latest restructure - Westfield's third in a decade - involves a transfer of wealth from the retail trust to the corporation. It is unfair for the trust and the terms of the deal ought to be amended.

Incidentally, Westfield's founding Lowy family sold out of the retail trust in a block trade at $3.09 a security last March. Should the deal proceed, they re-enter the stock at an NTA (net tangible asset value) of $2.81 a security.

Yet the main game is the price that investors in the trust are required to pay for Westfield to walk away from the management rights. Security holders in both stocks will vote on the deal in late May.

Here is the nub of it: the shuffle of Westfield's global $70 billion shopping mall empire is being

spruiked to investors on the basis of ''adjusted earnings'', but it is critical to assess the asset values.

Westfield Group (WDC) tips in net assets of $5.7 billion and Westfield Retail (WRT) net assets of $9.6 billion - after backing out the $850 million capital return that goes only to retail trust holders. Even so, they contribute 62 per cent of the net assets but end up with 51 per cent of the vehicle (to be named Scentre Group).

Although both Westfield Group and Westfield Trust effectively own equal shares in the Australian and New Zealand shopping centres, they co-own the retail trust, which has lower debt levels. After the deal, the gearing in the retail trust goes from 22 per cent to 38 per cent.

The transaction has been priced on the contribution of ''pro forma adjusted earnings'' from operations. The rationale is that the ''operating platform'', that is the Australian and New Zealand property management business of Westfield Group, is not carried as an asset on the group balance sheet and so, looking at the deal on the basis of NTA, is unfair to Westfield Group (effectively it would get nothing for the value of the management business).

This is true. Having internal management will not only save the retail trust money, but also deliver it access to external revenue - there are other investors in some of the shopping centres but the centres are all managed by Westfield Group.

It all boils down then to the price of the management business. KPMG, the expert on the trust, values the management business at $2.8 billion to $3.03 billion. This price is too high and the valuation range seems deliberately tight so that if enough pressure were to arise from large investors to tweak the terms, it might result in only a minor adjustment in favour of the trust.

No shock that ''independent experts'' KPMG (for WRT) and Grant Samuel (for WDC) have deemed the transaction ''fair''. Their conclusion followed the $1.7 million they were paid to write their reports.

Besides the acquisition of the usual ''independent'' opinions, Westfield has shelled out all up $150 million in transaction costs. Every major bank and broker in the market, a veritable army of silver-tongued advisers, is cheering it on.

Despite the concerted push from assorted bankers and advisers, there is some unrest among funds managers on price.

For those interested in comparable pricing of property trusts, there is a useful table in section 10 of the Grant Samuel report on the transaction.

Westfield management has vowed that it will not amend the deal. So now we have a game of chicken. Major shareholder UniSuper has signalled it is not happy with the pricing and raised its stake in the retail trust last month from 7.27 per cent to 8.49 per cent.

That is not enough to block the deal, unless other institutions also resolve to push for a change in price. The vote in both stocks requires 75 per cent approval. Assuming a turnout of 80 per cent, a 20 per cent protest vote might be sufficient to force a repricing.

If management senses it does not have the numbers as they enter meetings with major shareholders in coming weeks, it is likely to head off an embarrassing ''no'' vote by tweaking the price. Although the strategic rationale for the deal is sound, it is not compelling.