Simon Offers to Buy Macerich for $91 P/Share

It is a rumor no longer. Simon Property Group has reached out to The Macerich Co. via snail mail confirming that it would like to buy the retail REIT's outstanding stock for $91 per share in cash and Simon shares.
Coppola, Arthur

Arthur Coppola, Macerich

It is a rumor no longer. Simon Property Group has reached out to The Macerich Co. via snail mail confirming that it would like to buy the retail REIT’s outstanding stock for $91 per share in cash and Simon shares.

With a total value of the transaction at $22.4 billion, including the assumption of Macerich’s $6.4 billion debt,  Simon would give Macerich shareholders consideration in the form of 50 percent cash and 50 percent Simon common stock, using a fixed-exchange ratio.

Chairman & CEO David Simon wrote  to Macerich’s Chairman & CEO Arthur Coppola expressing his disappointment in not hearing back from him after their discussion on the future of their two companies over a week ago.

This exchange comes three days after an announcement in the media that the shopping-mall giant has approached Macerich about buying its outstanding stock, with no response from the latter as of yet.

“We believe Simon’s cash and stock offer would bring compelling value to shareholders of both companies. Macerich shareholders would receive a significant current cash premium as well as the long-term upside potential of an investment in Simon, which is widely recognized for its high-quality portfolio and industry-leading operating performance,” said Simon in a prepared statement.”(Our company) has consistently delivered outstanding returns to its shareholders and for a decade has outperformed Macerich in virtually every key operating and financial category, including share price performance, comparable NOI growth, sales per square foot, occupancy rates, FFO growth, dividend growth and total shareholder returns. We are confident our proposed transaction provides a highly attractive value proposition to Macerich shareholders.”

According to the Wall Street Journal, Macerich’s stock by midday Monday was trading above the price at which Simon offered to buy it, a sign that investors expect Simon will increase the offer as negotiations progress.

Macerich, of Santa Monica, is remaining mum on the offer so far. Stay tuned.