Simon Ammends Offer For General Growth Properties
Apr 14, 2010 Company News, Mergers & Acquisition
On February 16, mall operator Simon Property Group (SPG) announced a $10 billion unsolicited offer for bankrupt competitor General Growth Properties (GGP).
Under terms of that deal, Simon was offering $6 per share in cash, roughly $3 per share interest in Simon’s master planned communities and an offer to pay off GGP’s $7 billion in unsecured debt, which was highly unusual in that GGP’s unsecured creditors would have received 100 cents on the dollar, even though the company is currently in bankruptcy.
General Growth Properties rejected the offer, saying it would rather work through its bankruptcy.
Today, Simon Property Group released a letter to shareholders of General Growth Properties in which it stated that it is now offering to invest $2.5 billion in the reorganization of General Growth Properties. This is an alternative to an outright purchase of the company.
Under terms of the proposed deal, Simon would acquire 250,000,000 shares of GGP’s common stock, at $10 per share. Simon is proposing not to receive “any warrants or similar payment or fees in respects of its commitment to invest in GGP.” This means that current GGP shareholders will not suffer any dilution.
Simon is looking to counter a proposed plan of reorganization of GGP that is being sponsored by Brookfield Asset Management. Brookfield is offering the same $10 per share that Simon is now offering, but General Growth Properties would also offer “highly dilutive warrants” to Brookfield Asset Management under that proposed deal, which is co-sponsored by Pershing Square and Fairholme Capital.
