Simon Ups Ante, Taubman Ponders Offers

BLOOMFIELD HILLS, MI-Indianapolis-based retail giant Simon Property Group, Inc. has upped the ante in its already hostile takeover bid for Taubman Centers, Inc., as it is now offering $18 per share for the REIT’s stock, as much as $925 million. As the price of their stock jumped 2% in early trading Thursday to $16.82 per share, Taubman officials were advising shareholders to wait two weeks before making any decision.

Taubman’s board of directors plans to make up its mind on Simon Property Group’s tender offer during the next 10 business days, when they will give its opinion to shareholders.

Meanwhile, Simon Property Group has sued Taubman’s board of directors, which includes chairman, president and chief executive officer Robert S. and executive vice president William S. Taubman, along with former director A. Alfred Taubman. Simon Property Group has gone to federal court in Michigan to force the Taubman board to consider its offer and prevent the Taubman family from blocking the sale. It also is filing paperwork with the Securities and Exchange Commission for a shareholder vote.

Simon Property Group offered $17.50 per share for Taubman Centers stock last month, which would still be a record price for its shares. The new $18 per share offer is 35% higher than the price of Taubman Centers stock when Simon Property Group launched its takeover attempt, the larger REIT notes. Taubman countered then that family holdings were large enough to block any takeover attempt, which Simon Property Group now disputes in court.

“This compelling all-cash offer will produce full and immediate value that is not otherwise available to TCO shareholders,” says chief executive officer David Simon in a statement. “We call on the board of directors to uphold its fiduciary duty to all TCO shareholders. It is especially important that TCO’s independent directors establish an arms-length process to ensure that our offer is evaluated on the merits and that the rights of the public shareholders are protected.”

Already the owners of 185 million sf of retail space, Taubman’s 22 million sf consists of more upscale shopping centers, where space most recently rents for an average of $42.04 per sf. Simon Property Group collects an average of $30.37 per sf in its regional malls, $9.96 per sf in its community centers.