Simon Offers $22.4B Cash and Stock for Macerich

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Simon Property Group Inc offered to buy rival Macerich Co for $14.39 billion in cash in a deal that would join the No. 1 and No. 3 U.S. shopping mall owners.

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Macerich shares rose 5.7 percent to $91.65 in early trading on Monday, brushing past Simon's offer of $91 per share. Simon shares were up 0.4 percent at $181.35.

Mall operators in the United States have been experiencing a fall in traffic as consumers take to shopping online, which more convenient and often cheaper.

Simon said the enterprise value of the deal was $22.4 billion, including $6.4 billion in debt.

The offer, which is at a premium of 4.9 percent to Macerich's Friday close, will be 50 percent in cash and 50 percent in Simon common stock.

Simon disclosed a 3.6 percent stake in Macerich in November, which many investors saw as the first step towards a bid. Up to Friday's close, Macerich's stock had risen 17.7 percent since Simon disclosed its stake.

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"Considering the substantial benefits our offer provides, we are confident that, given the opportunity, Macerich's shareholders would accept our proposal," Simon Chief Executive David Simon said in a statement.

Macerich could not be reached immediately for comment.

The equity value of the deal is based on Macerich's 158.16 million shares outstanding as of Feb. 20.

Simon said it expected a deal to add to its funds from operations (FFO) immediately.

The company also said it had agreed to sell selected Macerich assets to General Growth Properties Inc once a deal closes.

BofA Merrill Lynch is the financial adviser to Simon and Latham & Watkins, LLP is the legal counsel to Simon. (Reporting by Sweta Singh in Bengaluru; Editing by Ted Kerr)