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.
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.
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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.
"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)