SANTA MONICA, CA—Indianapolis-based Simon Property Group has made a bid for the locally-based retail REIT Macerich Co., proposing to acquire all of its stock for $91 per share in a cash-and-stock offering. The total value of the transaction is $22.4 billion, including the assumption of Macerich's approximately $6.4 billion in debt.
Its announcement follows reports last week that the REIT had approached Macerich several times about an acquisition, including a verbal offer in recent weeks.
The offer represents a 30% premium to Macerich's closing stock price of $69.88 on November 18, 2014, the day before Simon disclosed its 3.6% investment in the REIT.
Simon also has reached an agreement in principle to sell selected Macerich assets to General Growth Properties. That piece of the transaction is not a condition to closing the proposed transaction. Also, Simon says financing is also not a condition for closing.
"Macerich's assets represent a strong strategic and geographic fit for Simon, and we believe this is an attractive opportunity to create long-term value for Simon shareholders," says Simon Property CEO David Simon, in a prepared statement. "We expect the transaction to be immediately accretive to FFO, and that we can improve the operations of these assets. Furthermore, we are pleased to have reached an agreement in principle with GGP on the sale of selected properties."
Simon's statement hints at rocky negotiations ahead, however. The company has made multiple attempts, including meetings in December 2014 and February 2015 to engage in discussions with Macerich, but to date it has refused to discuss the merits of an acquisition, he said.
"Considering the substantial benefits our offer provides, we are confident that, given the opportunity, Macerich's shareholders would accept our proposal," he added, noting that "many of our overlapping shareholders have voiced enthusiastic support to us for a potential combination since we publicly announced our stake in Macerich."
"We urge Macerich to forego entrenching defensive tactics that obstruct the will of its shareholders and instead engage in serious discussions with us."
BofA Merrill Lynch is acting as financial advisor to Simon and Latham & Watkins, LLP is acting as legal counsel to Simon in connection with the proposed transaction.
GlobeSt.com reached out for comment to participants. Calls were not immediately returned.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
