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Simon offers $10 billion for General Growth

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Simon Property Group Inc. on Tuesday morning announced a $10 billion offer to acquire Chicago-based General Growth Properties Inc. out of bankruptcy.

The acquisition would be the largest ever for Simon, already the nation’s largest mall owner. General Growth has 200 properties and $3.4 billion in revenue.

Simon says its bid includes $7 billion to creditors and about $3 billion to General Growth shareholders. The company also said its offer might be amended so shareholders could receive Simon stock instead of cash.

The offer amounts to $9 per share for shareholders of General Growth, which filed for Chapter 11 bankruptcy protection last year. Parts of its restructuring plan were approved in December.

“Simon’s offer provides the best possible outcome for all General Growth stakeholders,” David Simon, Simon’s chairman and chief executive officer, said in a statement Tuesday. “Simon is in the unique position of being able to offer General Growth creditors and shareholders full, fair and immediate value. Our offer provides much-needed certainty to conclude General Growth’s protracted reorganization process.”

Simon said it submitted its offer on Feb. 8 but made the offer public Tuesday, claiming it had not yet received a "substantive response" from executives.

General Growth filed the biggest real-estate bankruptcy in U.S. history in April after amassing $27 billion in debt during an acquisition spree. At the time of the filing, the company said it had about $11.8 billion in debt that had matured or was due by the end of 2012.

A spokesman for General Growth had no immediate comment on the deal.

Simon shares rose 23 cents in premarket trading Tuesday to $72.23.

Click here to see the latest update on this story.

Bloomberg News contributed to this report.

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  • General Giagantor!
    Isn't there anyone out there who can stop this conglomerate? Pretty soon all retail buildings, malls, restaurants, gas stations, grocery stores, etc. will be offered only through the good graces of...you guessed it...Simon!
  • GGP was Major Player
    http://www.ggp.com/ggpintro.aspx
  • General Growth?
    Who is General Growth? What properties do they have? Which part of the mall sector do they go after? High end? Low end?

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  1. Apologies for the wall of text. I promise I had this nicely formatted in paragraphs in Notepad before pasting here.

  2. I believe that is incorrect Sir, the people's tax-dollars are NOT paying for the companies investment. Without the tax-break the company would be paying an ADDITIONAL $11.1 million in taxes ON TOP of their $22.5 Million investment (Building + IT), for a total of $33.6M or a 50% tax rate. Also, the article does not specify what the total taxes were BEFORE the break. Usually such a corporate tax-break is a 'discount' not a 100% wavier of tax obligations. For sake of example lets say the original taxes added up to $30M over 10 years. $12.5M, New Building $10.0M, IT infrastructure $30.0M, Total Taxes (Example Number) == $52.5M ININ's Cost - $1.8M /10 years, Tax Break (Building) - $0.75M /10 years, Tax Break (IT Infrastructure) - $8.6M /2 years, Tax Breaks (against Hiring Commitment: 430 new jobs /2 years) == 11.5M Possible tax breaks. ININ TOTAL COST: $41M Even if you assume a 100% break, change the '30.0M' to '11.5M' and you can see the Company will be paying a minimum of $22.5, out-of-pocket for their capital-investment - NOT the tax-payers. Also note, much of this money is being spent locally in Indiana and it is creating 430 jobs in your city. I admit I'm a little unclear which tax-breaks are allocated to exactly which expenses. Clearly this is all oversimplified but I think we have both made our points! :) Sorry for the long post.

  3. Clearly, there is a lack of a basic understanding of economics. It is not up to the company to decide what to pay its workers. If companies were able to decide how much to pay their workers then why wouldn't they pay everyone minimum wage? Why choose to pay $10 or $14 when they could pay $7? The answer is that companies DO NOT decide how much to pay workers. It is the market that dictates what a worker is worth and how much they should get paid. If Lowe's chooses to pay a call center worker $7 an hour it will not be able to hire anyone for the job, because all those people will work for someone else paying the market rate of $10-$14 an hour. This forces Lowes to pay its workers that much. Not because it wants to pay them that much out of the goodness of their heart, but because it has to pay them that much in order to stay competitive and attract good workers.

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