Macerich rejects Simon Property’s $16-bn takeover offer

Macerich Co, the third-largest US shopping mall owner, rejected a $16-billion takeover bid from larger rival Simon Property Group Inc, saying that the unsolicited offer "substantially undervalues" the company.

Simon Property Group Inc, the largest mall operator in the US, went hostile after Macerich refused to enter into talks over a deal to merge the two mall operators.

Indianapolis-based Simon offered to pay $91 per share in cash and stock, valuing the deal at about $22.4 billion, including assumption of Macerich's $6.4-billion debt.

Under the proposed offer, Macerich shareholders would receive 50-per cent in cash and 50-per cent in Simon stock.

The offer represents a 30-per cent premium to Macerich's closing price on 18 November 2014, the day before Simon disclosed it had taken a 3.6-per cent stake in Macerich.

Simon also proposed to spend $400 million to $500 million annually on development projects over the next five years and sell certain Macerich assets to Chicago-based General Growth Properties, the second-largest mall operator in the US.

Macerich said the offer undervalues the company and adopted the rights plan or so-called ''poison pill'' by issuing new shares to shareholders, a move designed to make it very expensive for Simon to succeed with its hostile offer.

Macerich shareholders on record as on 30 March will have the right to buy one preferred share for each common share held and the rights plan would expire on the date of its 2016 annual shareholder meeting.

Macerich, whose assets include Tysons Corner Center in Virginia, Fashion Outlets of Niagara Falls in New York, Biltmore Fashion Park and Scottsdale Fashion Square in Arizona and Santa Monica Place in Southern California, also said it would stagger the election of its directors, making it more difficult to oust the board.

A successful deal would add to Simon's portfolio of high-end malls and also allow it to expand in California and other western United States.

California-based Macerich was founded in 1964 in Ames, Iowa, by Mace Siegel and Richard Cohen, and has been based in Santa Monica for over 30 years.

After major acquisitions like Westcor in 2002 and Wilmorite in 2005, Macerich has a national footprint and today owns 95 malls in 19 states.