By Anjie Zheng
Macerich Co. rejected the "best and final" bid from Simon
Property Group Inc., which promptly withdrew its $16.8 billion
offer, ending for now the possible combination of rival mall
operators in the United States.
Macerich, in a letter to Simon Property Group, said the offer of
$95.50 per share undervalued the company and its growth prospects.
Simon said it was pulling the offer in light of Macerich's decision
"not to engage in discussions with Simon."
Simon, the largest U.S. mall owner, was eager to acquire
Macerich, the nation's third-largest mall owner, because the
combined company would have a bigger slice of the thriving high-end
retail real-estate market. Retailers, however, were concerned that
Simon would gain too much power over the nation's best shopping
malls if it succeeded in acquiring Macerich.
The Santa Monica, California-based Macerich said Tuesday that it
had worked to expand and redevelop its core portfolio in the past
three years, positioning itself to deliver strong profits in the
future.
Macerich's shopping centers include the highly profitable
Biltmore Fashion Park in Phoenix and Tysons Corner Center outside
of Washington, D.C.
Macerich had fought the acquisition attempt. In addition to
rejecting Simon's original bid of $91 a share, or $16 billion,
Macerich approved a so-called poison pill provision allowing
shareholders to buy shares at a discount, diluting an acquirer's
stake. The company also staggered its board of directors so that
only a minority of seats can open up each year. Such moves are
designed to thwart takeover attempts.
In Maryland, where Macerich and many other REITs are
incorporated, state law affords them antitakeover protections that
can slow down hostile suitors and limit their ability to accumulate
shares without the consent of the target company's board.
The Macerich bid was Simon's largest and boldest takeover
campaign yet. The total price tag, including the assumption of
debt, was $23.2 billion. Simon had said it would sell certain
Macerichmalls to General Growth Properties Inc., the nation's
second-largest mall owner, in what market-watchers saw as a way of
allaying antitrust concerns.
Simon owns 190 properties, including Roosevelt Field mall on
Long Island, N.Y., and Houston Galleria, both of which have some of
the highest sales per square foot of any mall in the country.
In November, Simon disclosed a 3.6% stake in Macerich, a move
many investors saw as the first step in a takeover attempt. The
disclosure sent Macerich's share price soaring to a multiyear
high.
Macerich's shares ended Tuesday down 2.3% at $84.33.
Write to George Stahl at george.stahl@wsj.com
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