Simon Property makes 'final' General Growth offer

Back to TopCommentsE-mailPrintBookmark and Share

Simon Property Group Inc. stepped up its three-month quest to acquire rival General Growth Properties Inc., making a “best and final” $6.5 billion bid for the bankrupt mall company a day before a scheduled court hearing.

The offer is valued at $20 a share, Indianapolis-based Simon said Thursday in a statement. It consists of $5 in cash, $10 in shares of Simon stock and the distribution of shares in a new company, General Growth Opportunities, valued at $5.

General Growth previously said it supports a financing plan led by Brookfield Asset Management Inc. that would keep the mall owner independent and issue stock warrants to the Toronto-based company and its partners. Simon said Thursday it’s also willing to replace Brookfield in an investment plan, without warrants, to keep General Growth independent.

“These offers are best and final,” Simon CEO David Simon said in a letter to General Growth’s board. Simon “will not participate in the bidding process in the GGP bankruptcy proceeding in any way once GGP commits to issue the warrants associated with the latest Brookfield-sponsored plan.”

Simon’s original bid on Feb. 16 would have given General Growth stockholders $9 a share, including $6 in cash. That was turned down as too low.

Both that plan and the new one pay all General Growth unsecured creditors, who hold about $7 billion in debt, in full.

Shares in General Growth, based in Chicago, closed Thursday at $15.84 each in New York Stock Exchange trading.

The Brookfield plan must be approved by the U.S. Bankruptcy Court overseeing the case. A hearing on the plan is scheduled for Friday. Brookfield and its partners would get 40 percent of 120 million stock warrants they’re seeking once the proposal is approved by the court. They would receive 20 percent more on July 12, and the remainder over the course of their commitment to General Growth.

“The $20 offer is fair to GGP shareholders,” Cedrik Lachance, senior mall analyst at Newport Beach, Calif.-based Green Street Advisors, said in an interview Thursday night. “You can take Simon’s cash today or you can wait for Brookfield to potentially create a similar value.”

The rise in General Growth’s share price reflected investor expectation that Simon would make another offer, he said.

David Simon said last week that warrants would make a purchase of General Growth too expensive. Simon estimates the warrants could cost General Growth shareholders $895 million, while General Growth puts the value at about $519 million.

David Keating, a spokesman for General Growth, said the company had no comment on Simon’s newest offer.

Katherine Vyse, a spokeswoman for Brookfield, didn’t respond to a request for comment after regular business hours.

Simon said Blackstone Group LP has committed to joining its proposed takeover of General Growth. It said it still would be able to acquire General Growth even should Blackstone drop out.

Simon is willing to replace Brookfield in the recapitalization plan as an alternative to its own takeover bid, it said in Thursday’s statement.

As it planned an investment in General Growth, the second- largest mall company, Simon has lined up partners ING Clarion Real Estate Securities, Taconic Capital Advisors, Oak Hill Advisors LP and Deutsche Bank AG’s RREEF unit.

“In regards to the other alternative plan, the idea of an investment in General Growth by its largest competitor is absurd,” Brookfield said Thursday before Simon revised its offer. “The value of the warrants is less than 2 percent of enterprise value, and therefore not meaningful to the long-term value proposition of a $30 billion company.”

Simon’s proposals are “clearly superior to other options on the table,” Benjamin Yang, an analyst at Keefe Bruyette & Woods Inc., wrote Thursday night in a note to clients. “SPG appears to have taken the lead in the sweepstakes for GGP.”

General Growth filed the largest real estate bankruptcy in U.S. history in April 2009 after amassing $27 billion in debt making acquisitions. Its properties include New York’s South Street Seaport, Boston’s Faneuil Hall and the Grand Canal Shoppes and Fashion Show in Las Vegas.



Post a comment to this story

We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
You are legally responsible for what you post and your anonymity is not guaranteed.
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
Subscribe to IBJ
  1. I am a Lyft driver who is a licensed CDL professional driver. ALL Lyft drivers take pride in providing quality service to the Indianapolis and surrounding areas, and we take the safety of our passengers and the public seriously.(passengers are required to put seat belts on when they get in our cars) We do go through background checks, driving records are checked as are the personal cars we drive, (these are OUR private cars we use) Unlike taxi cabs and their drivers Lyft (and yes Uber) provide passengers with a clean car inside and out, a friendly and courteous driver, and who is dressed appropriately and is groomed appropriately. I go so far as to offer mints, candy and/or small bottle of water to the my customers. It's a mutual respect between driver and passenger. With Best Regards

  2. to be the big fish in the little pond of IRL midwest racin' when yer up against Racin' Gardner

  3. In the first sentance "As a resident of one of these new Carmel Apartments the issue the local governments need to discuss are build quality & price." need a way to edit

  4. As a resident of one of these new Carmel Apartments the issue the local governments need to discuss is build quality & price. First none of these places is worth $1100 for a one bedroom. Downtown Carmel or Keystone at the Crossing in Indy. It doesn't matter. All require you to get in your car to get just about anywhere you need to go. I'm in one of the Carmel apartments now where after just 2.5 short years one of the kitchen cabinet doors is crooked and lawn and property maintenance seems to be lacking my old Indianapolis apartment which cost $300 less. This is one of the new star apartments. As they keep building throughout the area "deals" will start popping up creating shoppers. If your property is falling apart after year 3 what will it look like after year 5 or 10??? Why would one stay here if they could move to a new Broad Ripple in 2 to 3 years or another part of the Far Northside?? The complexes aren't going to let the "poor" move in without local permission so that's not that problem, but it the occupancy rate drops suddenly because the "Young" people moved back to Indy then look out.

  5. Why are you so concerned about Ace hardware? I don't understand why anyone goes there! Every time ive gone in the past, they don't have what I need and I end up going to the big box stores. I understand the service aspect and that they try to be helpful but if they are going to survive I think they might need to carry more specialty parts.