Simon Property Scraps $3.6B Taubman Merger

Taubman-owned Stamford Town Center in Stamford, Conn.

Simon Property Group, the nation’s largest owner and operator of shopping malls, has terminated a $3.6 billion merger agreement with rival Taubman Centers Inc., citing the impact of the pandemic on Taubman and claiming the REIT had breached its obligations under the deal. 

First announced in February, the prospective merger of the two REITs represented one of the largest consolidations in the retail real estate industry in recent years. Indianapolis-based Simon was due to acquire an 80 percent stake in Bloomfield Hills, Mich.-based Taubman, which owns 24 high-end retail assets primarily in the U.S.

According to a statement this morning by Simon, the company has exercised its contractual rights to scrap the merger agreement based on two separate grounds: First, that the COVID-19 pandemic has had a unique material impact on Taubman compared to other industry players, and second, that the mall owner had breached its obligations relating to the operation of its business under the terms of the agreement.

“In particular, Taubman has failed to take steps to mitigate the impact of the pandemic as others in the industry have, including by not making essential cuts in operating expenses and capital expenditures,” the statement claims.

Simon also filed an action today in the Circuit Court for the Sixth Judicial Circuit of Oakland County, Mich., against Taubman Centers, Inc. and The Taubman Realty Group Limited Partnership, requesting a declaration that Taubman has suffered a Material Adverse Event under the merger agreement and had breached the covenants of the deal.

NYSE-listed Simon owns interests in around 235 retail properties spanning 191 million square feet worldwide. As lockdown measures expired, the real estate investment began the process of reopening its shopping malls with new safety measures in May.