Simon Makes Final Offer to Macerich
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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowIndianapolis-based Simon Property Group Inc. (NYSE: SPG) says it is making its best and final offer to acquire California competitor The Macerich Co. (NYSE: MAC). In a letter to the company, Simon Chief Executive Officer David Simon outlined the $23.2 billion offer and set a negotiation deadline of April 1.
March 20, 2015
News Release
Indianapolis, Ind. — Simon Property Group, Inc. (NYSE: SPG) today announced that it has sent a letter to The Macerich Company (NYSE: MAC) outlining its best and final offer to acquire all of the outstanding shares of Macerich for $95.50 per share in cash and Simon shares. All other terms of Simon's previous $91.00 per share offer remain the same, including consideration in the form of 50% cash and 50% Simon common stock, utilizing a fixed exchange ratio. The total value of the proposed transaction is approximately $23.2 billion, including assumption of approximately $6.4 billion of Macerich debt outstanding (including its pro rata share of mortgage debt from unconsolidated entities).
The offer represents a 37% premium to Macerich's unaffected closing stock price of $69.88 on November 18, 2014, the day before Simon disclosed its 3.6% investment in Macerich (equivalent to 5.71 million shares). The offer is also $24.50 per share above, or a 35% premium to, the $71.00 share price underlying the November 2014 agreement by Macerich's Board of Directors to issue 10.9% of Macerich's shares to Ontario Teachers' Pension Plan in exchange for certain joint venture interests.
David Simon, Simon's Chairman and Chief Executive Officer, said, “Macerich's decision to adopt extreme defensive measures is disappointing. We have repeatedly expressed our desire to work with Macerich to reach a mutually beneficial agreement and do not believe a protracted, multi-year proxy battle is in the interests of the shareholders of either company. We believe our offer is compelling and will deliver significant and immediate value to Macerich shareholders. We encourage the Macerich Board to give our proposal the serious consideration it deserves and to take into account the views of Macerich shareholders.”
There is no financing condition to the proposal and Simon believes there are no legal or other impediments to completing the proposed transaction.
Simon has posted a new investor presentation to its website, which can be accessed at http://investors.simon.com. The presentation corrects certain items regarding Simon that were contained in the Macerich investor presentation published earlier this week. Simon also will file a copy of the presentation with the Securities and Exchange Commission (SEC).
BofA Merrill Lynch is acting as Simon's lead financial advisor, with Morgan Stanley & Co. LLC also acting as a financial advisor in connection with this transaction. Latham & Watkins LLP is acting as legal counsel to Simon.
The full text of Mr. Simon's March 20, 2015 letter to Macerich is below.
March 20, 2015
Mr. Arthur M. Coppola
Chairman of the Board and
Chief Executive Officer
The Macerich Company
401 Wilshire Boulevard, Suite 700
Santa Monica, CA 90401
Dear Art:
I had hoped that by now, we could have engaged in meaningful discussions to determine if a deal could be agreed upon for Simon's acquisition of The Macerich Company. Because that has not happened, I am writing to advise you as follows:
We are making our best and final offer for all Macerich common stock of $95.50 per share, payable 50% in cash and 50% in Simon common stock using a fixed exchange ratio.
All of the remaining terms of our prior offer remain the same, including the fact that our offer is not subject to financing or the sale of assets to General Growth Properties.
We hope you and your board will give this offer full and fair consideration and will take into account input from Macerich shareholders.
Out of respect for the shareholders of both companies, we have decided not to nominate directors for the Macerich board or otherwise prolong this process.
Accordingly, if we do not meet with Macerich to negotiate terms and conditions of a definitive agreement by 5:00 p.m., Pacific Time on Wednesday, April 1, 2015, this offer and our interest in pursuing a transaction with Macerich will be withdrawn.
I look forward to hearing from you.
Sincerely,
David Simon
Chairman of the Board and
Chief Executive Officer
About Simon
Simon is a global leader in retail real estate ownership, management and development and a S&P100 company (Simon Property Group, NYSE: SPG). Our industry-leading retail properties and investments across North America, Europe and Asia provide shopping experiences for millions of consumers every day and generate billions in annual retail sales. For more information, visit www.simon.com.
Source: Simon Property Group Inc.