Simon Property raises bid for rival Macerich to $16.8 bn
21 March 2015
Simon Property Group Inc, the largest mall owner in the US, today raised its cash and stock bid for is smaller rival Macerich Co by 5 per cent to $16.8 billion and said that it is its ''best and final offer''.
Simon has raised its bid from $91 per share or $16 billion to $95.50 amounting to $16.8 billion, valuing the deal at about $23.2 billion, including assumption of Macerich's $6.4-billion debt.
Indianapolis-based Simon, which holds a 3.6-per cent stake in Macerich, said it will not seek to nominate its directors on Macerich's board and has set an 1 April deadline for Macerich to respond to the offer or it will be withdrawn.
Macerich said that it received Simon's offer and its board of directors would review the proposal.
Macerich had earlier this week rejected Simon's initial bid, saying the deal undervalued the company and added that it had ''serious antitrust concerns'' because of Simon's partnership with the second-largest mall operator in the US, General Growth Properties Inc. (See: Macerich rejects Simon Property's $16-bn takeover offer).
''It is a concerted effort by the two largest companies in the industry to acquire the number three company,'' Macerich had said.
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, had also 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.
Simon's acquisition is aimed at getting it a bigger presence in Arizona and Southern California, where Macerich had a large concentration of properties.
Macerich owns 59 shopping centres, while Simon owned 190 properties, including two of the highest-selling malls in the country - Roosevelt Field mall on Long Island and Houston Galleria.
Real estate analyst Craig Silvers, president of Bricks & Mortar Capital told Los Angeles Times that Simon wanted Macerich was because it had "a great collection of shopping centres, malls and outlet centres, predominantly in solid and growing markets".
Recent years had seen mall operators face challenges due to the sharp increase in online sales, the success of non-mall discounters such as Wal-Mart and Costco, and the loss of tenants through mergers or business reverses. Further, with incomes stagnating, footfall at mall retailers had declined.
Macerich itself had bought rivals over the years and still had substantial potential for growth, according to Silvers. It recently acquired full ownership of the Fashion Outlets of Chicago and was going to develop the Fashion Outlets of San Francisco at the former site of Candlestick Park.
According to Macerich chief executive Arthur Coppola traffic at his malls had declined "maybe 1 per cent in the previous year. However, the same period had seen total sales rise 3.5 per cent to 4 per cent.
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.