Simon Terminates $3.6B Acquisition Deal

(photo courtesy of RATIO Architects)

Indianapolis-based Simon Property Group Inc. (NYSE: SPG) has pulled out of its proposed $3.6 billion acquisition of Michigan-based Taubman Centers Inc. (NYSE: TCO). Simon says the decision is the result of the COVID-19 pandemic’s impact on Taubman, along with the mall group’s breach of the merger agreement.

The acquisition was first announced in February. As part of the deal, Simon would have received an 80% ownership interest in Taubman.

Simon filed a complaint in the Circuit Court for the 6th Judicial Court of Oakland County, Michigan. 

The company says the pandemic “has had a uniquely material and disproportionate effect on Taubman compared with other participants in the retail real estate industry.”

Additionally, Simon says Taubman breached its obligations of the agreement related to the operation of its business. The company alleges Taubman failed to mitigate the impact of the pandemic “by not making essential cuts in operating expenses and capital expenditures.”

Simon says the merger agreement specifically allowed for it to terminate the deal if a pandemic “disproportionately hurt Taubman.” 

In a news release issued Wednesday, Taubman called Simon’s termination of the agreement “invalid and without merit.” 

“Taubman intends to hold Simon to its obligations under the Merger Agreement and the agreed transaction, and to vigorously contest Simon’s purported termination and legal claims,” the company said. “Taubman intends to pursue its remedies to enforce its contractual rights under the Merger Agreement, including, among other things, the right to specific performance and the right to monetary damages, including damages based on the deal price.”