Big mall merger: Simon buys Taubman

It still needs approval from two-thirds of the outstanding Taubman voting stock

The Simon Property Group will buy mall operator Taubman Realty in a deal valued at around $3.6 billion as those properties continue to struggle along with their retail tenants.

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Simon Property Group Inc. is the nation's largest mall operator. It said Monday that its operating partnership, Simon Property Group, LP, will buy all of Taubman stock for $52.50 per share. The Taubman family will sell about one-third of its ownership stake at the transaction price and remain a 20% partner in Taubman Realty Group LP.

TickerSecurityLastChangeChange %
TCOTAUBMAN CNTR33.89-0.75-2.17%
SPGSIMON PROPERTY GROUP INC.63.91-0.91-1.40%

Taubman Realty owns, manages or leases 26 shopping centers in the U.S. and Asia, including The Mall at Short Hills in New Jersey, and Waterside Shops in Naples, Florida.

Malls have been littered by retail bankruptcies and store closings after a vast shift in the way Americans shop. Last week Macy's, a cornerstone in many malls, announced that it is closing 125 of its least productive stores and cutting 2,000 corporate jobs. The store closures represent about one fifth of all its locations.

A woman walks through a shopping mall.

A consortium of buyers, including mall owners Simon and Brookfield Property Partners, bid $81 million last week for Forever 21, the ubiquitous mall staple that filed for bankruptcy protection in September. Several years ago, Simon and the company that became Brookfield Property Partners, another big mall operator, teamed up to save struggling teen apparel retailer Aeropostale, which was in bankruptcy.

Mall companies are trying to avoid darkened areas inside their properties, which can exacerbate their problems and trigger lease clauses that allow tenants to renegotiate.

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The acquisition of a majority stake in Taubman is expected to close by the middle of the year. It still needs approval from two-thirds of the outstanding Taubman voting stock and a majority of outstanding Taubman voting stock not held by the Taubman family.

Shares of Taubman Centers Inc., based in Bloomfield Hills, Michigan, soared more than 52 percent before the market open. Shares of Simon Property, based in Indianapolis, rose about 1 percent.

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