Mall owners Simon and Taubman revise terms of merger, cut $ 800 million in price

Luxury mall owner Taubman Centers agreed to a lower price to merge with America’s largest mall owner Simon Property Group, the companies said on Sunday, avoiding what could have been a legal battle stormy during the holidays.

As part of the new deal, Simon will now pay $ 43 per share for Taubman, down about 18% from the original price of $ 52.50.

The companies also said they have settled their pending litigation. Simon and Taubman were scheduled to face off in Oakland County Superior Court, Mich., From Monday to negotiate the disputed deal.

In February, before the arrival of the coronavirus pandemic in the United States, Simon had agreed to buy Taubman in a deal valued at $ 3.6 billion, eyeing Taubman’s 26 high-end malls. , including a handful in Asia. But the company then announced in June that it was exercising its contractual rights to end the transaction. Among other things, Simon claimed that Taubman’s shopping mall portfolio was suffering more than some of its peers during the pandemic, due to lack of spending on tourism and luxury.

Taubman quickly filed a counterclaim, and the two headed to court.

But the revised conditions announced indicate that there is hope in the retail real estate industry that traffic will rebound in America’s best malls once a Covid-19 vaccine is widely distributed and consumers will regain confidence to return to stores to shop.

Even before the pandemic, shopping malls had suffered from a drop in foot traffic, with more people shopping online and tenants of stores and restaurants closing stores or going bankrupt. The pain has been particularly strong on the part of besieged department store chains like Bon Ton and Sears. Two mall owners – CBL and Pennsylvania Real Estate Investment Trust – filed for Chapter 11 bankruptcy protection earlier this month.

With the new deal, Simon is saving nearly $ 800 million. Taubman also agreed not to declare or pay a dividend in common stock until March 2021.

The structure of the original deal, whereby Simon will acquire an 80% stake in Taubman while the Taubman family sell about a third of its stake and remain a 20% partner, remains unchanged, the companies said.

The boards of directors of Simon and Taubman have approved the terms of the transaction, which is expected to close later this year or early 2021. It remains subject to the approval of Taubman shareholders.

Simon’s shares are down about 50% this year, while Taubman’s are up about 27%.

Read the full press release here.