Judge clears General Growth bankruptcy exit plan
LOS ANGELES -- Simon Property Group Inc. on Friday withdrew its $6.5 billion bid to acquire rival shopping mall owner General Growth Properties Inc., following a bankruptcy court ruling that Simon said would have made the deal too expensive.
The move ends a months-long campaign by the nation's largest shopping mall owner to take over its closest competitor. It was an unlikely bidding war for a company that just over a year ago had the dubious honor of being the biggest real estate bankruptcy case in U.S. history.
General Growth filed for Chapter 11 bankruptcy protection last April involving about half its company's 200 malls, including Lincolnshire Commons in Lincolnshire and Spring Hill Mall in West Dundee.
Not part of the filing were other General Growth-owned malls in the Chicago area -- Northbrook Court in Northbrook, Oakbrook Center in Oak Brook, Golf Mill Shopping Center in Niles and Water Tower Place in Chicago.
The plan approved by U.S. Bankruptcy Court Judge Allan Gropper in New York should enable General Growth to emerge from Chapter 11 bankruptcy protection as a standalone company. Under the plan, General Growth would receive $6.5 billion from an investor group led by Canadian property manager Brookfield Asset Management Inc.
But the deal also included a break-up fee that would give the Brookfield consortium hundreds of millions in stock warrants if General Growth went with another bidder.
Simon Property said that would make any acquisition too costly, and abandoned its latest offer Thursday of $6.5 billion, or $20 a share.
"We cannot reach a mutually beneficial transaction," Simon Property Group Chairman and CEO David Simon said Friday.
Simon also blasted the General Growth board of directors, saying it "hastily decided in less than 24 hours to accept substantially less value."
A General Growth spokesman did not have an immediate comment Friday.
Chicago-based General Growth is the nation's second-largest mall operator with more than 200 centers in 43 states.
Simon is the largest U.S. shopping mall owner. It popularized the lifestyle center mall design that turned malls into neighborhood-like communities. It owns more than 380 properties, including the Houston Galleria and the Fashion Valley Mall in San Diego.
General Growth shares tumbled $1.77, or more than 11 percent, to $14.07 on Friday. The stock added 4 cents in aftermarket trading.
Shares in Simon Property added 80 cents to $85.68, while shares in Brookfield rose 95 cents, or nearly 4 percent, to $24.76.