- The Washington Times - Wednesday, April 1, 2015

The nation’s mall biggest mall operator has given up on its $23.2 billion hostile takeover bid for a rival whose portfolio include such upscale properties as Tysons Corner Center, a day after its sweetened bid was summarily rejected.

Simon Property Group, the nation’s largest shopping mall chain, revealed late Tuesday evening it was withdrawing its offer for rival Macerich Co., a real estate investment trust based in California, ending a contentious battle between the two companies during which Simon Property Group chairman and CEO David Simon accused Macerich officials of using “scorched-earth” tactics to avoid a buyout.

Simon’s purchase of Macerich, which also owns the Queens Center in New York, a heavily-frequented mall widely considered the most profitable in the country, would have placed the Indianapolis-based developer securely atop the nation’s shopping center food chain, with more than 300 properties.

Macerich, for its part, owns and manages 51 properties throughout the United States, including Northern Virginia’s Tysons Corner and the Cross County Shopping Center in New York.

Macerich, in a letter Tuesday to Simon Property Group, said the initial offer of $91 per share — and Simon’s “sweetened” offer of $95.50 per share — undervalued the company and its growth prospects.

The company said in a statement it would focus on its own internal efforts to improve profits and the company’s market value.

“The board, which includes real estate experts and a representative of one of our largest stockholders, concluded that now is not the right time to sell the company,” said Fred Hubbell, lead independent director of Macerich, in a statement. “We remain committed to continuing to grow stockholder value. We recognize it is incumbent upon us to have the public market understand the value of our business and properly reflect it in our share price.”

Simon, in turn, said it was pulling the offer in light of Macerich’s decision “not to engage in discussions.”

Simon 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, the most profitable slice of the stagnant mall business.

Macerich said last month that its decision to sell lower-quality malls and re-capitalize those assets into other opportunities had increased the company’s sales per square foot from $517 to $587.

The company also cited plans on spending $400 million to $500 million per year on high-return-on-cost projects that it expects will bolster stockholder value.

In addition to rejecting Simon’s initial offer March 9, the Macerich board approved two governance changes aimed at making it harder for it to be taken over. One of the changes was a “poison pill” allowing shareholders to buy shares at a discount, diluting an acquirer’s stake.

The move was designed to thwart future takeovers.

Mr. Simon, in response to the first rejection letter, railed against Macerich’s decision, saying it usurped shareholder rights.

Reactions by business analysts to the news of the collapse of the takeover bid have been mixed, with some wondering why Macerich waited until there was a hostile bid to announce moves to boost the share price.

“We wonder why these initiatives [by Macerich] were not adopted prior to Simon Property’s takeover attempt,” Evercore Partners analyst Steve Sakwa said.

With the deal off the table, Macerich shares ended the day down 6.6 percent at $78.73. They had fallen 11 percent since March 16, a day before the company rejected Simon Property’s first offer.

Simon Property’s shares ended the day up 1.2 percent at $197.99.

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