Simon makes new, $2.5 billion offer for General Growth

New York City Simon Property Group sweetened its offer to buy out its struggling competitor General Growth Properties on Wednesday, pledging to invest $2.5 billion in a reorganization and match the terms of a bankruptcy exit plan led by Brookfield Asset Management.

The proposal, which comes two months after Simon’s hostile bid valued at $10 billion was rejected, includes a $1 billion co-investment commitment by Paulson & Co. Simon said the plan is more favorable to General Growth shareholders than Brookfield’s offer because it doesn’t include the issuance of warrants. It said its offer amounts to $10 a share.

General Growth would emerge from bankruptcy as an independent company under both plans.

Simon offered $10 billion in February to take over Chicago-based General Growth, which dismissed the bid as too low. Instead, General Growth said it would reorganize under a $6.55 billion plan by Brookfield, Pershing Square Capital Management LP and Fairholme Capital Management LLC.

Under its new plan, Simon would buy 250 million shares at $10 each, which it said is the same amount Brookfield would acquire under its plan and the same price. It would also agree to the same terms as Brookfield’s plan for the recapitalization of the company and planned spinoff of a new entity. The removal of warrants would provide shareholders a benefit of at least $895 million, or $2.75 a share, Simon said.

There was no immediate comment from General Growth.

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