DealZone

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.

Simon Property says it is teaming up with hedge fund Paulson to try to unseat Brookfield Asset Management as the key investor in General Growth Properties as the mall operator angles toward an exit from its bankruptcy.

Simon said it and Paulson would invest $2.5 billion to help General Growth exit bankruptcy, and more importantly, make the investment without taking any warrants to buy shares like Brookfield and other investors have under its current plan, Paritosh Bansal reports.

Paulson, the $32 billion hedge fund run by billionaire investor John Paulson, has made a commitment to co-invest $1 billion with Simon. Sources told us earlier this week that Simon was looking at ways to revise its offer for GGP, which was seen getting hung up on anti-trust concerns.

Here’s the latest twist in the General Growth saga: Simon Property says it is weighing a higher bid for its smaller, bankrupt rival and could come up with something within a week.  That’s not surprising.

When General Growth investors Bill Ackman and Fairholme Capital Management stepped up with $3.3 billion of fresh capital to shore up a Brookfield Asset Management-backed plan, Simon lost the edge it had with unsecured creditors. The unsecured creditors stand to get cash under both plans now. And experts said it was too early for Simon to walk away from the game.

For now, Simon is trying to take away General Growth’s excuses for rebuffing its bid.

Fairholme Capital Management and Pershing Square, two key investors in General Growth Properties, have offered to invest another $3.93 billion in the mall operator to help it emerge from bankruptcy. Shareholders, who only had access to the stock again on the NYSE as of last Friday, bid the stock more than 4 percent higher in early Tuesday trade.

While the new offer does not knock out the one from GGP rival Simon Property Group, it could get more support among unsecured creditors who would have had to settle for cash and stock under GGP’s original proposal.

The latest deal builds on one from Brookfield Asset Management but now allows General Growth to remain an independent company instead of selling itself to Simon, its largest competitor.

Simon Property’s $10 billion offer for General Growth is seen as a pre-emptive strike coming just a week before a bankruptcy court hearing where General Growth was expected to ask for more time to offer its own plan for emerging from bankruptcy, writes Reuters’ Ilaina Jonas and Helen Chernikoff.

Here are some different takes on the deal:

*  “Due to synergies between Simon Property and General Growth, we feel it is unlikely a competitor would be able to bid more than SPG, so we expect that other meaningful bids are unlikely,” Rich Moore, managing director at RBC Capital Markets in Solon, Ohio, in a note to investors. – Bloomberg

*  “Ever since General Growth entered bankruptcy-court protection last year, potential buyers have been circling the mall owner’s premium retail assets,” Michael Corkery writes in the WSJ’s Deal Journal. The blog lists Brookfield Asset Management and Vornado Realty Trust as potential bidders.