Simon Property Group (SPG), the world's largest shopping mall operator, has offered $10 billion to acquire General Growth Properties (GGWPQ), its biggest competitor, which is currently working its way through bankruptcy.
Simon is prepared to pay $7 billion to General Growth's creditors and $3 billion to shareholders. The latter would get more than $9 a share, comprising $6 in cash and more than $3 worth of assets. Simon says the deal would help General Growth emerge from bankruptcy sooner."Simon's offer provides the best possible outcome for all General Growth stakeholders," its Chief Executive David Simon said in a statement. "Simon is in the unique position of being able to offer General Growth creditors and shareholders full, fair and immediate value. . . . We are confident it is the best option for all General Growth constituencies and far superior to any other third-party proposal or stand-alone plan that could be completed."
General Growth's unsecured creditors support the deal. "Full cash payment to all unsecured creditors and the substantial recovery for equity holders that Simon has proposed would be a great result," Michael Stamer, counsel for the unsecured creditors, said in a statement. "We fully support and encourage prompt engagement by the company with Simon."
Indianapolis-based Simon says it first proposed the deal to General Growth on Feb. 8 but made the offer public Tuesday after failing to receive a "substantive response" from its struggling rival. Chicago-based General Growth, which owns 200 malls in the U.S., filed for Chapter 11 bankruptcy protection in April 2009, marking the biggest real estate bust in history.
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