Busy week ahead at the mall
General Growth has a busy week ahead.
The No. 2 U.S. mall owner is weighing a $5.8 billion takeover bid from its larger rival, Simon Property.
It postponed a hearing in bankruptcy court to Friday to have a ‘stalking horse’ bid approved, which would set the floor for future offers for the company.
General Growth has so far favored a bid led by Brookfield Asset Management to help it exit bankruptcy, choosing it over another offer by Simon to come in as a passive investor and buy a minority stake in the company.
But it still has to figure out whether Simon’s offer to buy all of the company makes sense. The latest postponement of the hearing — the third time it has done so – could be a sign it is doing just that.
When Simon put in a bid, it wanted it to be a slam dunk. It offered $18.25 per share for all of General Growth on Sunday, more than double its initial takeover offer of $9 per share and a 21.7 percent premium to the Brookfield-led bid at $15 per share.
But the answer may not be that easy for General Growth. The company rejected Simon’s recap offer due to qualitative issues, such as what it would mean to have a competitor own a large piece of it, even though Brookfield asked for warrants worth hundreds of millions of dollars in return for its investments while Simon did not. In the past, it has raised antitrust concerns around merging the No. 1 and No. 2 U.S. mall operators.
The situation has become increasingly tense over the last few days, with both sides unhappy about how the other has approached negotiations.
In the end though one should, the bankruptcy court judge, a neutral arbiter, will finally sign off on any deal.