Two of the largest retail mall owners and operators in the nation and metropolitan New York, with seven shopping centers between them in Westchester and Rockland counties and Fairfield County, Conn., have clashed this month over an unsolicited bid by one to acquire the other.
- Cross County Shopping Center in Yonkers, managed by The Macerich Co. File photo
Directors of The Macerich Co., headquartered in Santa Monica, Calif., on Tuesday rejected a March 9 proposal by Simon Property Group Inc., based in Indianapolis, to acquire Macerich for $91 per share, with half payable in cash and half in shares of Simon common stock. The proposed deal was valued by Simon at $22.4 billion, including the assumption of Macerich”™s approximately $6.4 billion in outstanding debt.
Simon also announced it had reached an agreement in principle to sell selected Macerich assets to General Growth Properties Inc., a Chicago-based real estate investment trust and the developer of a planned 700,000-square-foot retail center in Norwalk.
But Macerich directors on Tuesday unanimously rejected Simon”™s bid, saying it substantially undervalued Macerich and was not in the best interests of the company and its stockholders.
The California-based real estate investment trust owns 51 million square feet of property in 51 regional shopping centers. In Yonkers, Macerich led the $250 million renovation of Cross County Shopping Center and manages the 59-year-old open-air mall for Brooks Shopping Centers LLC. In Connecticut, it owns and operates Danbury Fair, the state”™s second-largest shopping mall.
Among factors cited by Macerich in a statement announcing its decision, the board said it found significant obstacles to closing the deal proposed by Simon “due to serious questions arising under applicable state and federal law, including those raised by Simon Property Group’s stock accumulation and other issues.” Simon in mid-November reported its 3.6 percent investment in Macerich, equivalent to 5.71 million shares.
Macerich directors also said they believe that Simon Property”™s partnership with General Growth Properties “is stockholder-unfriendly and raises questions of legality.”
Macerich Chairman and CEO Arthur Coppola said the company over the last two years has sold lower-quality malls to fund its development pipeline. Over the next five years, the company plans to spend $400 million to $500 million annually on development and redevelopment projects to further transform its assets portfolio and “deliver industry-leading growth and significantly greater value to Macerich stockholders than Simon”™s proposal,” Coppola said.
When rejecting its competitor”™s proposal, Macerich directors also unanimously approved governance changes designed to protect the company from “coercive takeover attempts.” The Simon company on March 12 notified Macerich that it was considering nominating five dissident candidates for election to its takeover target”™s board at Macerich”™s annual stockholders meeting.
- Woodbury Common Premium Outlets in Central Valley, operated by Simon Property Group. File photo
Pointing to Simon”™s agreement with GGP to sell certain Macerich assets, directors said they believe that partnership “raises serious antitrust concerns as it is a concerted effort by the two largest companies in the industry to acquire the number three company. As a result, the board believes it is vital to take proactive measures to protect stockholder value and prevent the accumulation of stock by any group that might seek to force the sale of the company.”
Responding to the rejection of his company”™s purchase bid, David Simon, chairman and CEO of Simon Property Group, said Macerich”™s decision “is based on a rosy view of its future prospects.” He urged Macerich shareholders to compare Macerich”™s performance history with Simon”™s  “long track record of delivering industry-leading results that have outpaced Macerich in virtually every operating and financial category.”
“Given this extreme, scorched-earth response, Macerich shareholders should scrutinize the actions and motives of the Macerich board,” Simon said.
A major mall owner in the lower Hudson Valley, Simon Property Group operates The Galleria at White Plains and The Westchester mall in White Plains, Jefferson Valley Mall in Yorktown Heights, The Shops at Nanuet in Rockland County and Woodbury Common Premium Outlets in Central Valley in Orange County.
