Simon Property abandons offer for Capital Shopping

Back to TopCommentsE-mailPrintBookmark and Share

Simon Property Group Inc., the largest U.S. shopping mall owner, abandoned its $4.5 billion bid for Capital Shopping Centres Group Plc after the British company resisted Simon’s takeover interest.

Simon doesn’t plan to make a formal offer for Capital Shopping because the company won’t give Simon access to its accounts, the Indianapolis-based mall investor said in a statement Tuesday. Simon made a conditional bid of 425 pence a share in cash on Dec. 15, valuing Capital Shopping at 2.9 billion pounds ($4.5 billion). On Jan. 7, Capital Shopping said it was worth as much as 625 pence a share to a bidder.

Capital Shopping “has refused to share any due diligence information with Simon,” the company said in the statement. “Simon therefore has no alternative other than to announce that it does not intend to make an offer” for all of Capital Shopping’s shares.

Buying Capital Shopping would have let Simon enter the U.K., Europe’s largest economy outside the euro region. Capital Shopping owns four of the U.K.’s 10 biggest malls, including the Manchester Arndale. This was the second time in the past year that the U.S. company faced resistance from a takeover target. It pursued General Growth Properties Inc., the second-biggest U.S. mall owner, for three months in 2010 after being rebuffed. Simon withdrew that offer in May.

General Growth, in bankruptcy at the time it was pursued by Simon, favored a rival proposal to keep it independent and proceeded with that deal. General Growth emerged from the largest U.S. real estate bankruptcy on Nov. 9.

Capital Shopping fell as much as 5.5 percent in London trading Tuesday. The shares were down 5.5 pence, or 1.4 percent, at 387 pence shortly before 11 a.m. there. They remain about 14 percent higher than the close on Nov. 24, the day before Simon’s interest in Capital Shopping was disclosed.

“They don’t have to open their books to a predator as long as they’re happy that the shareholders aren’t going to be too aggressive with the board if they refuse to do so,” said Alan Carter, an analyst at Evolution Securities Ltd. in London. Evolution has a “sell” rating on Capital Shopping, which is unrelated to the bid.

Capital Shopping said on Jan. 7 that it had changed the terms of an agreement to acquire the Trafford Centre mall in the English city of Manchester. Simon’s bid, which Capital Shopping said was inadequate, depended on Capital Shopping abandoning the Trafford Centre agreement.

Simon owns 5.1 percent of Capital Shopping, according to data compiled by Bloomberg. The U.S. company said Tuesday that it continues to oppose the “value-destructive” Trafford Centre deal and urged Capital Shopping shareholders to vote against it at a meeting Jan. 26.

Capital Shopping’s major shareholders will probably support the Manchester mall purchase, said Mark Kelly, special situations sector strategist at Olivetree Securities.

“Simon will likely sell its CSC stake as a result of this, but we sense there is sufficient demand for this stock from South African institutional shareholders to ensure this doesn’t act as too much of an overhang,” Kelly said in an e-mailed statement.

Wendy Baker, a spokeswoman for Capital Shopping, didn’t immediately respond to a call seeking comment.

Capital Shopping owns the highest quality portfolio of shopping centers in the U.K. and has better business prospects than some competitors, though there still isn’t much growth potential in the industry, Liberum’s Horwood said. His rating on the shares is under review following Simon’s announcement.

Simon reduced its European holdings last year by selling its interest in a joint venture that owned seven shopping centers in France and Poland. The company recorded a gain on the sale of $281 million, according to a regulatory filing.

The Indianapolis company gets 3.5 percent of its net operating income from international operations, according to a third- quarter report. It also owns shopping centers in Japan, Mexico and South Korea.


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 so impressed that the smoking ban FAILED in Kokomo! I might just move to your Awesome city!

  2. way to much breweries being built in indianapolis. its going to be saturated market, if not already. when is enough, enough??

  3. This house is a reminder of Hamilton County history. Its position near the interstate is significant to remember what Hamilton County was before the SUPERBROKERs, Navients, commercial parks, sprawling vinyl villages, and acres of concrete retail showed up. What's truly Wasteful is not reusing a structure that could still be useful. History isn't confined to parks and books.

  4. To compare Connor Prairie or the Zoo to a random old house is a big ridiculous. If it were any where near the level of significance there wouldn't be a major funding gap. Put a big billboard on I-69 funded by the tourism board for people to come visit this old house, and I doubt there would be any takers, since other than age there is no significance whatsoever. Clearly the tax payers of Fishers don't have a significant interest in this project, so PLEASE DON'T USE OUR VALUABLE MONEY. Government money is finite and needs to be utilized for the most efficient and productive purposes. This is far from that.

  5. I only tried it 2x and didn't think much of it both times. With the new apts plus a couple other of new developments on Guilford, I am surprised it didn't get more business. Plus you have a couple of subdivisions across the street from it. I hope Upland can keep it going. Good beer and food plus a neat environment and outdoor seating.