Simon Property Group Inc. withdrew a $16.8 billion
proposal to acquire Macerich Co. after the smaller mall owner rejected the
sweetened takeover offer as too low.
Macerich said in a statement late Tuesday that the
$95.50-a-share offer did not reflect the full value of the company. Simon said
separately that it pulled its bid after Macerich's board refused to engage in
talks.
Both companies operate malls in the Philadelphia region.
Simon, the largest U.S. mall landlord, said on March 20
that its latest bid was final after Macerich rebuffed a proposal of $91 a
share. Purchasing the Santa Monica, Calif.-based real estate investment trust
would have allowed Simon to add top-tier properties that rarely come up for
sale.
"The board unanimously concluded that your proposal
continues to substantially undervalue Macerich," chairman and chief
executive officer Arthur Coppola said in a letter to Simon chairman and CEO
David Simon, included in the statement. "Our board believes that
continuing to execute on our strategic plan will yield substantially more value
for our stockholders."
Macerich took steps to thwart a hostile takeover after
the first public offer. The company said March 17 that its board approved a
staggered election of directors, which would make it more difficult to oust the
board, and adopted a "poison pill" defense designed to raise the
price Simon would have to pay.
Investors had been betting that Simon's latest offer
wouldn't be enough for a deal. Macerich shares closed Tuesday at $84.33, down
from $93.50 on the day before the new bid. The company's stock declined again
Wednesday, falling to $78.73.
Simon counts King of Prussia, Philadelphia Mills, and
Oxford Valley among its nine malls in the Philadelphia region.
Macerich, which recently renovated Deptford Mall, said in
July that it would invest $107 million in the Gallery at Market East in a joint
venture with mall manager Pennsylvania Real Estate Investment Trust. That
arrangement also requires an agreement with the City of Philadelphia.
While the bid rejection was expected, Macerich's refusal
"without any offer to engage Simon or explore 'strategic alternatives' is
surprising and frankly difficult to understand," Stifel Nicolaus & Co.
analysts led by Nathan Isbee wrote in a note to clients Wednesday. Macerich
"could face a sustained period of underperformance."
Macerich owns or has stakes in more than 50 malls,
including Tysons Corner Center in Virginia, Westside Pavilion in Los Angeles,
and the Shops at North Bridge in Chicago. The company, founded in 1964 in Ames,
Iowa, by Mace Siegel, has been upgrading its centers, similar to what its
mall-landlord peers are doing.
Source: Philly.com
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