SANTA MONICA, CA—Macerich Co. has rejected Simon Property Group's $16 billion bid for its company saying that the $91 per share cash-and-stock is not in the best interests of its stockholders.

Simon Property Group's proposal "significantly undervalues Macerich and fails to reflect the full value of our portfolio of unique and irreplaceable assets and our positive growth prospects," said Arthur Coppola, Macerich chairman and CEO, says in a prepared statement released Tuesday morning. "Over the past two years, we have transformed Macerich's portfolio by selling lower quality malls to fund our highly value-accretive development pipeline."

The company also announced Tuesday morning it was implementing a poison pill maneuver to prevent a hostile takeover. Namely, it announced that its Board of Directors unanimously approved two governance changes allowed under Maryland general corporation law to protect itself from "coercive takeover attempts." It adopted a classified board structure in which directors will be assigned to one of three classes, each serving three-year terms. It also adopted a limited duration stockholder rights plan effective immediately and authorized a dividend distribution of one preferred share purchase right on each outstanding share of Macerich's common stock.

Macerich also cited antitrust concerns as part of the reason for its dismissal of Simon's bid. In the original proposal put forth by Simon last week, the REIT agreed to sell some of Macerich's assets to General Growth Properties. The Macerich Board called it "a concerted effort by the two largest companies in the industry to acquire the number three company."

The overriding factor behind the refusal, though, is Macerich's belief that Simon's offer undervalued its portfolio and strategy of acquiring high-end malls. For that reason there is greater upside for shareholders if Macerich remains independent and stays true to its strategy, Coppola says.

"By focusing on Class-A properties and developments in the Super Zip Codes of the U.S., we have built a robust portfolio that is extremely attractive to retail partners looking to grow in key fortress locations and outlet venues," he says.

"We believe that our continued focus on portfolio transformation, productivity enhancement and development opportunities will deliver industry-leading growth and significantly greater value to Macerich stockholders than Simon's proposal."

Simon Property, for its part, argued in an investor proposal released the day after its bid that its offer does reflect the upside value plus would give shareholders a cash premium.

Calls to Simon Property and Macerich were not immediately returned.