The nation’s largest shopping mall owner, Simon Property Group, made a $10 billion hostile bid Tuesday to acquire its ailing rival, General Growth Properties, operator of malls in Manchester and Waterbury.
The deal would allow General Growth, the No. 2 owner of shopping centers – including Shoppes At Buckland Hills in Manchester and Brass Mill Center in Waterbury — to emerge from Chapter 11 bankruptcy protection.
General Growth filed for bankruptcy last year after buckling under the weight of billions in debt it racked up during a massive expansion effort fueled by cheap credit. General Growth’s other best known centers include the Glendale Galleria in Southern California and the South Street Seaport in Manhattan.
The offer would fully repay $7 billion to General Growth’s unsecured creditors and $3 billion to shareholders. Stockholders would get $6 a share in cash and $3 a share in other assets. The offer, however, might be amended so shareholders could receive Simon stock instead of cash.
Simon made the public offer after General Growth executives failed to make a “substantive response” Simon’s overtures.
“Simon’s offer provides the best possible outcome for all General Growth stakeholders,” said David Simon, chairman and CEO, in a statement.
Though the official committee for General Growth’s unsecured creditors has backed the deal, stockholders appeared to be looking for a sweeter offer from Simon or one of its competitors. Shares in General Growth shot up 18 percent, or $1.65, to $11.05 in morning trading.
A spokesman Chicago-based General Growth had no immediate comment.
Simon, unlike many of its competitors, has been able to weather the economic downturn thanks in part to its higher rents. The Indianapolis-based company popularized the so-called lifestyle center mall design that turned malls into veritable neighborhood-like communities. The owns more than 380 properties, including the Houston Galleria and the Fashion Valley Mall in San Diego.
Earlier this month, Simon reported a decline in fourth-quarter results, in part due to a one-time charge. But it still managed to beat Wall Street forecasts and its revenue held steady. (AP)
