Macerich Rejects Hostile Offer From Mall Rival Simon Property

(RTTNews) - Mall operator Macerich Co. (MAC) on Tuesday rejected a hostile offer by larger rival Simon Property Group, Inc. (SPG) to acquire it in a cash and stock deal valued at $91 per share, or $22.4 billion.

Macerich's Board of Directors have unanimously rejected the unsolicited, conditional offer from Simon Property Group announced on March 9 saying it substantially undervalues Macerich.

"After careful consideration, the Macerich Board of Directors unanimously determined that Simon Property Group's unsolicited proposal significantly undervalues Macerich and fails to reflect the full value of our portfolio of unique and irreplaceable assets and our positive growth prospects," Macerich Chairman and CEO Arthur Coppola said in a statement.

Macerich noted that it has sold lower quality malls over the past two years to focus on higher quality malls. It has also recycled the capital into value enhancing redevelopment and acquisition opportunities, increasing its sales per square foot from $517 to $587.

Additionally, Macerich has adopted a "poison pill" defense to defend against a takeover in the form of a limited duration shareholder rights plan, which becomes effective today and would expire at the company's annual meeting in 2016.

The rights become exercisable if any person or group acquires beneficial ownership of 10 percent or more of Macerich's common stock. Simon Property has disclosed a 3.6 percent stake in Macerich in November.

The Macerich board also adopted a new classified board structure that will see the directors being assigned to one of three classes, each serving three-year terms. However, the company has committed to review the continued need for the classified board structure in 2016.

A combination of Simon and Macerich would bring together the country's first- and third-largest shopping-mall owners. It would also enable Indianapolis, Indiana-based Simon, which has 190 properties, to expand in the West. Macerich owns 59 malls in the U.S., concentrated in California and Arizona.

Simon Property Group, the owner of the King of Prussia Mall, said earlier that it has reached an agreement in principle to sell selected Macerich assets to General Growth Properties, Inc. (GGP) in connection with the closing of the acquisition in order to allay antitrust issues.

"We believe that our continued focus on portfolio transformation, productivity enhancement and development opportunities will deliver industry-leading growth and significantly greater value to Macerich stockholders than Simon's proposal," Coppola added.

In Tuesday's regular trading session, MAC is currently trading at $92.04, down $2.85 or 3.01% on a volume of 2.04 million shares, and SPG is trading at $186.53, down $0.54 or 0.29% on a volume of 0.24 million shares.