Chicago The heat between the nation’s two largest mall operators keeps getting turned up. Simon Property Group on Wednesday dismissed General Growth Properties’ plan to invite bids, saying it would be risky for shareholders and that the mall owner should work with Simon to develop a definitive takeover plan. Simon’s response came on the heels of General Growth’s rejection of Simon’s unsolicited $10 billion offer to acquire its rival out of bankruptcy.
On Tuesday, Simon said it had offered to acquire General Growth for $10 billion, including $9 billion in cash. The offer would give General Growth creditors a $7 billion payout. General Growth filed for bankruptcy protection in April 2009.
In responding to Simon’s offer, General Growth said the price was too low and that it would invite others to make bids. In a letter to Simon CEO David Simon, General Growth CEO Adam Metz said the company remains committed to restructuring its debt but will not allow Simon to derail that process.
Metz said Simon's offer "is not sufficient to preempt the process we are undertaking to explore all avenues to emerge from Chapter 11 and maximize value for all the company's stakeholders."
Simon made a quick retort and said that it was “unwilling to waste our time and resources in a process not conducted on a level playing field, that is dragged out to provide an unfair advantage to any party, or that will serve any agenda other than maximizing return for General Growth’s stakeholders.”
“Our offer is fully financed and we are prepared to complete confirmatory due diligence within 30 days,” CEO Simon said in the response.
Indianapolis-based Simon is the nation’s largest mall operator, and owns more than 300 malls. Chicago-based General Growth owns more than 200 U.S. malls. It sought Chapter 11 bankruptcy protection in April 2009 after failing to refinance portions of its $27 billion debt as they came due.
If the two companies were to combine, it would create a mall giant, with 550 properties, representing at least a third of the entire U.S. market. Analysts said such dominance would give Simon unrivaled clout in lease negotiations with retailers and in financing talks with its lenders.