Macerich Rejects Simon Property's Takeover Bid

Macerich Co. rejected the "best and final" bid from Simon Property Group Inc., which promptly withdrew its $16.8 billion offer, ending for now the possible combination of rival mall operators in the United States.

Macerich, in a letter to Simon Property Group, said the offer of $95.50 per share undervalued the company and its growth prospects. Simon said it was pulling the offer in light of Macerich's decision "not to engage in discussions with Simon."

Simon, the largest U.S. mall owner, was eager to acquire Macerich, the nation's third-largest mall owner, because the combined company would have a bigger slice of the thriving high-end retail real-estate market. Retailers, however, were concerned that Simon would gain too much power over the nation's best shopping malls if it succeeded in acquiring Macerich.

The Santa Monica, California-based Macerich said Tuesday that it had worked to expand and redevelop its core portfolio in the past three years, positioning itself to deliver strong profits in the future.

Macerich's shopping centers include the highly profitable Biltmore Fashion Park in Phoenix and Tysons Corner Center outside of Washington, D.C.

Macerich had fought the acquisition attempt. In addition to rejecting Simon's original bid of $91 a share, or $16 billion, Macerich approved a so-called poison pill provision allowing shareholders to buy shares at a discount, diluting an acquirer's stake. The company also staggered its board of directors so that only a minority of seats can open up each year. Such moves are designed to thwart takeover attempts.

In Maryland, where Macerich and many other REITs are incorporated, state law affords them antitakeover protections that can slow down hostile suitors and limit their ability to accumulate shares without the consent of the target company's board.

The Macerich bid was Simon's largest and boldest takeover campaign yet. The total price tag, including the assumption of debt, was $23.2 billion. Simon had said it would sell certain Macerichmalls to General Growth Properties Inc., the nation's second-largest mall owner, in what market-watchers saw as a way of allaying antitrust concerns.

Simon owns 190 properties, including Roosevelt Field mall on Long Island, N.Y., and Houston Galleria, both of which have some of the highest sales per square foot of any mall in the country.

In November, Simon disclosed a 3.6% stake in Macerich, a move many investors saw as the first step in a takeover attempt. The disclosure sent Macerich's share price soaring to a multiyear high.

Macerich's shares ended Tuesday down 2.3% at $84.33.

Write to George Stahl at [e-mail]

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