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General Growth snubs initial offer from rival Simon

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Simon Property Group Inc. will have to wait in line with other potential bidders and raise its offer if it wants to land bankrupt rival General Growth Properties Inc., the Chicago-based company said in a letter late Tuesday.

Indianapolis-based Simon has offered $10 billion to acquire General Growth and take on another $21 billion in secured debt. The offer includes $7 billion to pay unsecured creditors and another $3 billion for common shareholders.

Shares in General Growth rallied almost 28 percent Tuesday, to $12.02, above the Simon offer valued at about $9 per share, as investors anticipated a higher offer. The shares had fallen as low as 32 cents after General Growth filed for the biggest real-estate bankruptcy in U.S. history in April. It amassed $27 billion in debt during an acquisition spree. The company reported $3.4 billion in annual revenue.

General Growth said in its letter that Simon's bid is "not sufficient to preempt the process we are undertaking to explore all avenues to emerge from Chapter 11."

The letter, from General Growth CEO Adam Metz, did not rule out a tie-up with Simon and actually invited Simon to participate along with other bidders.

"We will be providing detailed information on the company, including a confidential information memorandum, financial projections, and asset level information to participants," Metz wrote. "As we are committed to fully exploring all potential options available to the company, we would like to include Simon as part of this process. We believe the information we would provide to you as part of this process will enable you to better understand the company, get to a higher valuation, and provide a fully documented offer."

The combination of Simon and GGP would own 525 malls with 450 million square feet of retail space. It would give Simon high-performing properties it has long coveted, including Fashion Show in Las Vegas, Water Tower Place in Chicago, South Street Seaport in New York and Faneuil Hall Marketplace in Boston.

Total domination of the U.S. shopping mall business, and the corresponding leverage with retail tenants, has been CEO David Simon’s goal since he took over the company in 1995. If he lands General Growth, call it mission accomplished.

Among the other potential bidders for GGP is Canada-based Brookfield Asset Management Inc., which has offered to invest capital so that General Growth could emerge from bankruptcy.

Activist investor Bill Ackman, whose Pershing Square Capital Management owns about 25 percent of General Growth, has said he believes the shares are worth a minimum of $24 apiece.

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  1. The east side does have potential...and I have always thought Washington Scare should become an outlet mall. Anyone remember how popular Eastgate was? Well, Indy has no outlet malls, we have to go to Edinburgh for the deep discounts and I don't understand why. Jim is right. We need a few good eastsiders interested in actually making some noise and trying to change the commerce, culture and stereotypes of the East side. Irvington is very progressive and making great strides, why can't the far east side ride on their coat tails to make some changes?

  2. Boston.com has an article from 2010 where they talk about how Interactions moved to Massachusetts in the year prior. http://www.boston.com/business/technology/innoeco/2010/07/interactions_banks_63_million.html The article includes a link back to that Inside Indiana Business press release I linked to earlier, snarkily noting, "Guess this 2006 plan to create 200-plus new jobs in Indiana didn't exactly work out."

  3. I live on the east side and I have read all your comments. a local paper just did an article on Washington square mall with just as many comments and concerns. I am not sure if they are still around, but there was an east side coalition with good intentions to do good things on the east side. And there is a facebook post that called my eastside indy with many old members of the eastside who voice concerns about the east side of the city. We need to come together and not just complain and moan, but come up with actual concrete solutions, because what Dal said is very very true- the eastside could be a goldmine in the right hands. But if anyone is going damn, and change things, it is us eastside residents

  4. Please go back re-read your economics text book and the fine print on the February 2014 CBO report. A minimum wage increase has never resulted in a net job loss...

  5. The GOP at the Statehouse is more interested in PR to keep their majority, than using it to get anything good actually done. The State continues its downward spiral.

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