Simon Property Offers To Buy Macerich In $22.4 Bln Deal

(RTTNews) - Mall operator Simon Property Group Inc. (SPG) said Monday that it has offered to acquire smaller rival Macerich Co. (MAC) for $22.4 billion in cash and stock, including the assumption of Macerich's about $6.4 billion of debt outstanding.

Simon Property said it has sent a letter to Macerich, confirming its prior talks regarding a proposal to acquire all of the outstanding stock of the Santa Monica, California-based real estate investment trust for $91 per share.

Macerich shareholders will receive consideration in the form of 50 percent cash and 50 percent Simon common stock, utilizing a fixed exchange ratio.

The offer price represents a 30 percent premium to Macerich's unaffected closing stock price of $69.88 on November 18, 2014, the day before Simon disclosed its 3.6 percent stake in Macerich. Simon Property's acquisition of a 3.6 percent stake in Macerich was seen as its first step in a takeover bid for that company.

The offer price also represents a 28 percent premium to the $71 share price underlying the agreement by Macerich's board of directors to sell a 10.9 percent ownership stake in the company to Ontario Teachers' Pension Plan in exchange for certain joint venture interests in November 2014.

Simon noted that to facilitate that transaction, Macerich waived its excess share provision, which restricts share ownership of greater than 5 percent.

Simon said that despite multiple attempts, Macerich has thus far refused to engage in discussions regarding an acquisition. The company urged Macerich to "forego entrenching defensive tactics" that obstruct the will of its shareholders and instead engage in serious discussions with the company on a merger.

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 also said 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. The company added that neither transaction financing nor the sale of assets to General Growth will be a condition to closing the proposed transaction.

Simon's board of directors has unanimously endorsed the proposal, which has no financing condition. The company believes there is no legal or other impediment to completing the proposed transaction.

Simon said it expects the transaction to be immediately accretive to funds from operations or FFO.

BofA Merrill Lynch is acting as financial advisor to Simon and Latham & Watkins, LLP is acting as legal counsel to Simon in connection with the proposed transaction.

In May 2014, Simon completed the spin off of its strip centers and smaller enclosed malls into an independent, publicly traded real-estate investment trust called Washington Prime Group Inc. (WPG).

SPG is trading at $181.45, up $0.87 or 0.48 percent on a volume of 316,586 shares.

MAC is trading at $91.98, up $5.26 or 6.07 percent on a volume of 933,254 shares.