Simon Rescinds Offer to Buy Macerich

By Barbra Murray, Contributing Editor

David Simon

Two rebuffs from The Macerich Co. appear to be quite enough for Simon Property Group. Simon, unwilling to pay a penny more than the revised $23.2 billion it had offered Macerich for the acquisition of the national regional-mall REIT, has withdrawn its unsolicited bid. 

“While we expected MAC to reject Simon’s bid, the outright bid rejection without any offer to engage Simon or explore ‘strategic alternatives’ is surprising and frankly difficult to understand, in our view,” analysts with brokerage and investment banking firm Stifel, Nicolaus & Co. Inc. wrote in a research note.

For the better part of a month, conversations were had, letters were exchanged and on March 20, Simon upped its original offer of $91.00 per share in cash and stock for all outstanding shares to $95.50 per share. The revision increased the total price tag, which included the assumption of existing debt, by nearly $1 billion over the original offer of $22.4 billion. The latter figure marked Simon’s best and final proposal, but the retail real estate giant’s best wasn’t good enough.

At one point, the back-and-forth between the two companies took on negative and sarcastic tones. In a letter to Simon’s CEO David Simon, Macerich CEO Arthur Coppola stated, “Over the past two years we sold lower quality malls and recycled the capital into value enhancing redevelopment and acquisition opportunities, increasing our sales per square foot from $517 to $587. Our board recognizes that, as a competitor, these trends present a challenge for you on multiple fronts.”

In a letter to Coppola, Simon criticized Macerich’s rejection of the first offer as being “based on a rosy view of its future prospects,” and asserted that the REIT “clearly does not believe its shareholders can be trusted.”

Finally, in explaining Macerich’s refusal of the revised acquisition offer, Coppola specified the same reasons the company had cited from the beginning:  the proposition substantially undervalues Macerich. The offer was carefully considered by the Board, as well as the company’s financial, real estate and legal advisers and the answer the second time around was the same. No.

It’s anyone’s guess what, if anything, will happen next between Simon and Macerich. What probably won’t’ happen, is the bandwagon effect.

“I don’t think that Simon’s overture to Macerich portends any significant M&A wave in the retail sector,” Nathan Isbee, director with Stifel, told Commercial Property Executive.