MANUFACTURING
Mall Giant Simon Makes Bid for Macerich
Simon Property Group Inc. continued its campaign to acquire The Macerich Co.
Simon, one of the largest mall landlords in America, issued a presentation to its investors on March 10 outlining the reasons why its gambit to take over Macerich, which is headquartered in Santa Monica, Calif., would benefit the giant Indianapolis-headquartered company.
In the presentation, David Simon, Simon’s chairman, said real estate market research finds that mergers and acquisitions for real estate investment trusts such as Simon and Macerich typically turned out to be highly profitable. Macerich had outperformed in every key operating and financial category.
On March 9, Simon announced its proposal to acquire Macerich for $91 per share in cash and stock, which some media reports contended would add up to $16 billion. Simon’s announcement of its proposal made headlines across the United States and in the business press. In response, Macerich acknowledged it had received the proposal and advised its investors to not take any action until the company had reviewed its options. In a statement, David Simon noted that Macerich had refused many times to participate in talks on a deal.
Simon is an S&P100 company, which means it is kept on a Standard & Poor’s index of 100 leading U.S. stocks.
In California, it owns high-profile malls such as Fashion Valley in San Diego, Del Amo in Torrance, The Shops at Mission Viejo in Mission Viejo, the Stanford Shopping Center in Palo Alto and Desert Hills Premium Outlets in Cabazon. It also owns nationally known retail centers such as Aventura Mall in Florida and King of Prussia Mall in Pennsylvania.
Macerich owns luxury mall Santa Monica Place in Santa Monica and Westside Pavilion in Los Angeles as well as other retail centers in California such as Fashion Fair in Fresno, Inland Center in San Bernardino, Capitola Mall in Capitola and The Oaks in Thousand Oaks.
Proposal notwithstanding, both real estate REITs reported in financial documents that they continue to undertake major developments.
Last month, Simon made a deal with Hudson’s Bay Co., a Canadian retailer, to build a real estate joint venture valued at $3.4 billion, according to media reports. The venture will scout additional properties and eventually announce an initial public offering.
On March 2, Simon announced that it had extended its $2 billion revolving credit facility. Its borrowing capacity has increased from $2 billion to $2.75 billion and might be increased to $3.5 billion when it matures in 2019.
In November, Macerich announced that it undertook a joint venture with Lennar Corp. to develop a 500,000-square-foot outlet at Candlestick Point in San Francisco. It is the former site of Candlestick Park, the former home of the San Francisco 49ers and San Francisco Giants.
