Simon Property Group and Taubman Centers Are Set To Merge
The merger will end a lawsuit between the two companies over a previous deal.
Simon Property Group has settled a long simmering dispute of its takeover of fellow real estate company Taubman Centers. America’s largest owner of shopping malls will pay $43 a share for Taubman, much lower than the $52.50 per share originally offered.
The acquisition will leave Simon Property with 80% ownership interest in The Taubman Realty Group Limited Partnership (“TRG”).
But Taubman will not be required to declare or pay a dividend on its common stock before March 1, 2021, and then, only subject to certain specified imitations and conditions.
The new deal allows the two firms to avoid an extended and costly legal battle as their lawsuit was just about to begin today in an Oakland County Superior Court in Michigan on Monday. The suit was prompted by Simon Property Groups abrupt decision in June to drop out of a purchase agreement which it had reached with Taubman Centers last February. Simon said at the time that it had changed its mind about the acquisition because the Corona Virus shutdowns had greatly depressed the value of shopping malls.
The cancelation of what would have been a $3.6 billion deal led to a 40% drop in the value of Taubman’s stock. The new deal saves Simon Property Group as much as $800 million.
— Taubman Centers (@TaubmanCenters) November 15, 2020
Taubman sued Simon over its reneging on the sale. But Simon asserted that the merger agreement had a clause which gave it the right to back out of the deal in cases where something like a pandemic should occur and have a greater effect on Taubman than on the market in general.
The company released a statement to that affect saying, “Taubman’s significant proportion of enclosed retail properties located in densely populated major metropolitan areas, dependence on both domestic and international tourism at many of its properties, and its focus on high-end shopping have combined to impact Taubman’s business disproportionately due to the COVID-19 pandemic when compared to the rest of the retail real estate industry.”
The news comes as Simon Property Group gave up on a few of its properties. According to a report in Market Watch the firm has defaulted on four of its struggling shopping malls that have $410.9 million of combined mortgage debt, the Mall at Tuttle Crossing in Dublin, Ohio, the Southridge Mall in Greendale, Wisconsin, Montgomery Mall in North Wales, Pennsylvania and the Crystal Mall in Waterford, Connecticut. The malls in question were purchased using different types of credit and their depositions will be handled accordingly.
Simon is a real estate investment trust engaged in the ownership of premier shopping, dining, entertainment and mixed-use destinations and an S&P 100 company (Simon Property Group, NYSE: SPG). Its properties across North America, Europe and Asia provide community gathering places for millions of people every day and generate billions in annual sales. For more information, visit simon.com.
Taubman Centers is an S&P MidCap 400 Real Estate Investment Trust engaged in the ownership, management and/or leasing of 26 regional, super-regional and outlet malls in the U.S. and Asia. Taubman’s U.S.-owned properties are the most productive in the publicly held U.S. mall industry. Founded in 1950, Taubman is headquartered in Bloomfield Hills, Mich. Taubman Asia, founded in 2005, is headquartered in Hong Kong.