Simon, Taubman Ink Revised Merger Agreement

While the new purchase price is lower than initially negotiated in February, the deal allows the REITs to avoid a legal battle.
Taubman Centers-owned Beverly Center in Los Angeles. Image courtesy of Taubman Centers, Inc.

After calling off merger plans in June, Simon Property Group has reached an agreement to acquire competing mall owner Taubman Centers Inc. The companies have settled on a modified purchase price of $43 per share, down from the original $52.5 per share the parties negotiated back in February. The merger is expected to close at the end of the year or in early 2021, following approval from Taubman shareholders and other customary closing conditions.  

Under the terms of the modified agreement, Taubman won’t declare or pay a dividend on its common stock prior to March 1, 2021. Following the said date, declaring and paying dividends on its common stock will be subject to certain limitations and conditions. The announcement was made through a joint statement.

Maintaining the terms of the initial deal, Simon is set to purchase 80 percent ownership interest in The Taubman Realty Group LP. Additionally, the Taubman family will sell approximately one-third of its ownership interest at the transaction price and remain a 20 percent partner in the limited partnership.

No day in court

By striking a new deal, the companies avoided a courtroom battle. After announcing it was withdrawing from the agreement, Simon filed a court action against Taubman, citing that Taubman’s revenue had suffered “material adverse effect” due to COVID-19 and the company failed to adequately mitigate the pandemic-generated damage.

Taubman responded by filing its own lawsuit, insisting Simon had to move forward with the merger agreement. The trial was slated to be settled in the Circuit Court for the Sixth Judicial District in Oakland County, Mich.