Simon Bids $10 Billion for General Growth

Darlington Musarurwa
16 Feb, 2010
New York City

Simon Property Group made its offer of $10 billion for General Growth Property Group public after directors held out for better options. Simon offered to pay unsecured creditors in full and the mall developer said the deal is not open-ended and has financing in place.

[R]9:40 AM New York – Simon Property Group made its offer of $10 billion for General Growth Property Group public after directors held out for better options. Simon offer will pay unsecured creditors in full and said that the deal is not open-ended.[/R]

Simon Property Group, Inc made its offer for General Growth Properties, Inc public after the company failed to response to the negotiations a week ago.

The Indianapolis, Indiana based mall developer offered $10 billion for General Growth assets and said its offer will pay unsecured creditors in full. The $9 a share offer pays $6 in cash and $3 for asset values.

Simon said the deal is fully financed and is not conditional to financing but the offer is not “open-ended” and urged the General Growth management make to make a quick decision.

Simon said that $9 billion of the $10 billion offer is in cash and holders of unsecured notes and bonds and bank loans will be paid in full. This consideration to creditors is $7 billion.

The deal does not offer to pay the secured creditors and the debt will remain in place.

Though Simon put up an aggressive pasture in its letter to the management and lead director, it appears that General Growth is holding out for a higher offer.

David Simon, Chairman and Chief Executive Officer, said, """"Simon''s offer provides the best possible outcome for all General Growth stakeholders. Simon is in the unique position of being able to offer General Growth creditors and shareholders full, fair and immediate value.”

Simon said it is prepared to offer stock to those shareholders who will like to participate in the future growth of the company.

General Growth bankruptcy in April 2009 was the largest real estate failure after the company made several acquisitions in the previous three years that catapulted the total debt to $26 billion.

At the time of filing the mall operator had less than $11 billion in debt but it could not refinance the debt at the time of financial markets meltdown.

Simon Property ((SPG)) increased 2% to $73.50 and General Growth Properties, Inc ((GGWPQ)) closed unchanged on Friday at $9.40.