Simon Property Group Inc. offered to buy Macerich Co. in a cash-and-stock transaction valued at about $22.4 billion, including debt, taking a buyout effort public after being rebuffed by the smaller U.S. mall owner.
Macerich shareholders would receive the equivalent of $91 a share as 50 percent cash and 50 percent Simon stock under the deal, Indianapolis-based Simon, the largest U.S. mall landlord, said in a statement Monday. The transaction would include the assumption of about $6.4 billion of debt.
The offer represents a 30 percent premium to Macerich’s closing price on Nov. 18, the day before Simon disclosed a 3.6 percent stake in the Santa Monica, California-based landlord, sparking speculation of takeover plans. Simon said it met with Macerich twice and has made multiple attempts to discuss its interest, and the company has so far refused to engage in talks.
“This is a very compelling offer that will enable Macerich stockholders to realize a substantial and immediate cash return while building long-term value through ownership of Simon shares,” Chairman and Chief Executive Officer David Simon said in a letter to Macerich Chairman and CEO Art Coppola, included in the statement.
Simon also said it has reached an agreement to sell certain Macerich assets to Chicago-based General Growth Properties Inc., the No. 2 U.S. mall landlord, in connection with completion of the deal.
A message left before West Coast business hours with Thomas O’Hern, Macerich’s chief financial officer, wasn’t immediately returned.
Macerich climbed 6.3 percent to $92.14 at 10:04 a.m. New York time. The stock has gained 32 percent since Simon first disclosed its stake. Simon shares were little changed Monday at $181.38.
Simon is likely to make a higher offer to win over Macerich, said David Auerbach, an institutional REIT trader at Esposito Securities LLC in Dallas.
“This is their first shot across the bow,” he said.
Takeovers of companies are one of the few ways large U.S. mall owners can grow because high-quality properties rarely come up for sale. Simon has been developing outlet malls around the world while refurbishing and expanding some of its biggest U.S. malls to boost growth.
Simon has also been active in transactions outside the U.S. In 2012, the company acquired an interest in European mall owner Klepierre, based in Paris.
The REIT hasn’t always been successful in trying to complete deals. It failed in an effort to take over General Growth after the second-largest mall owner filed for bankruptcy in 2009. General Growth exited bankruptcy in November 2010.
Some malls have struggled as many consumers take their shopping online. For more on the trend, see Retailers Reconsider Real Estate.