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(Ian Ritter is national online editor for GlobeSt.com/RETAIL.)

CHEVY CHASE, MD-The Mills Corp. has rejected the terms of Gazit-Globe’s $25.50-per-share offer to recapitalize the REIT, at least under the current conditions set forth by the proposal. A statement by Mills encourages the Israel-based firm to sign a standstill agreement so that its board can compare the offer to those submitted by other suitors.

One of the concerns outlined by Mills’ board is that Gazit-Globe chairman Chaim Katzman would take control of the company through the recapitalization, leaving little power to shareholders. It also says that other suitors for the company have already agreed to standstill and confidentiality agreements.

Gazit upped its offer by $1 per share last week. The firm had made its original, $1.2-billion recap proposal in October, when it purchased 9% of Mills’ stock.

As GlobeSt.com previously reported, the proposal includes the elimination of the requirement for a separate class of common stock, the easing of key closing conditions and assumptions, the reduction of confirmatory due diligence period to only 15 days, and no financing contingency, according to Gazit. The firm also states its board has already approved the proposal, contingent upon due diligence.

Gazit officials would not immediately return phone calls on Mills’ rejection of its offer.

Gazit management has also asked Mills to undertake its annual meeting in a timely manner. Mills’ board announced yesterday that it is pushing the meeting back to Dec. 29 from Dec. 21, a date that it says was decided on before Gazit made its request.

Mills’ management is exploring strategic alternatives, including a sale of the company, after higher-than-expected development costs and accounting regularities that have led to an SEC investigation as well as the sale of its foreign malls. Mills owns 39 malls and retail-entertainment centers throughout the US.

Gazit-Globe owns 41% of publicly traded grocery-center owner North Miami Beach, FL-based Equity One, among other real estate firms. Katzman is the chairman of both Gazit-Globe and Equity One.

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