Simon Property Group, the owner of SouthPark and Concord Mills, has launched a $16 billion hostile bid for Macerich Co. after saying its rival refused to discuss a combination of two of the largest U.S. mall operators.
Simon said Monday that it was offering $91 per share in cash and stock for each share of Macerich. That represents a premium of 30 percent to the closing price of the mall operator’s shares on Nov. 18, before Simon disclosed that it had accumulated a nearly 4 percent stake in Macerich.
The offer is valued at about $22.4 billion, counting Macerich’s debt.
Indianapolis-based Simon said the addition of Macerich would amount to a “strong strategic and geographic fit,” to its property portfolio, and it was confident that Macerich shareholders will accept its offer.
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Besides SouthPark and Concord Mills, the two largest malls in the Charlotte region, Simon co-owns Charlotte Premium Outlets. Macerich doesn’t own any malls in North Carolina.
Macerich said its board will review the proposal and, in the meantime, advised shareholders of the Santa Monica, Calif., company to take no action.
Simon said it was taking its bid to shareholders after Macerich refused to discuss an acquisition. Chairman and CEO David Simon told his Macerich counterpart, Arthur M. Coppola, in a letter dated Monday that it has been more than a week since the two sides discussed Simon’s interest, and he was disappointed that Coppola has not responded to him “as you said you would.”
Simon called the offer “very compelling.”
“We have completed nearly $40 billion of acquisitions in a variety of complex transactions during our 21 years as a public company and we see no legal or other impediment to completing our purchase of Macerich,” he wrote to Coppola.
Simon is a real estate investment trust, or REIT, that operates more than 200 properties in the United States, with a heavy presence in Florida, Texas and California, among other states. It also runs shopping centers in Canada, Japan, Mexico and other countries.
Macerich has 51 shopping centers in its portfolio, including locations in Chicago, the metro New York area and Washington, D.C.
Simon expects the deal would provide an immediate lift for its funds from operations, a key measure of operating performance for REITs.
Shares of Macerich jumped 6 percent, or $5.19, to $91.91 in Monday afternoon. Meanwhile, Simon Property Group Inc. shares edged up 4 cents to $180.62, and broader markets also advanced slightly.