Woodfield owner buys mall's builder in $3.6 billion deal

Even in commercial real estate, there's a circle of life.

Taubman Centers Inc., a pioneer in shopping malls during the 20th Century and a developer of Woodfield Mall almost 50 years ago, was acquired Monday by rival mall operator Simon Property Group Inc. - the Schaumburg mall's current owner.

Indianapolis-based Simon agreed to buy Taubman in a stock purchase deal worth approximately $3.6 billion. The Taubman family will sell about one-third of its ownership stake and remain a 20% partner in Taubman Realty Group LP.

The suburban Detroit-based company owns 26 shopping centers in the U.S. and Asia, none of which are in the Chicago area. In addition to Woodfield, Simon also manages Gurnee Mills in Gurnee, Chicago Premium Outlets in Aurora and Orland Square Mall in Orland Park,

The deal 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.

Simon and Taubman had been holding on-and-off discussions about a deal since late last year. The agreement comes as a wave of retail bankruptcies have squeezed mall-oriented REITs, putting pressure on the industry to consolidate.

The rise of e-commerce has more U.S. consumers shopping from home, making it harder for brick-and-mortar retailers to survive. That's weighed on malls, which are struggling to boost foot traffic. While both Taubman and Simon have fared better than some competitors during the recent retail turbulence, the shares of both companies have slumped over the past 12 months.

Taubman Centers, with partner Homart Development, opened Woodfield in 1971 as the largest in the U.S. with 59 stores, including anchors Sears, Marshall Field and J.C. Penney. The mall still remains the largest in Illinois and as been one of the top tourist attractions in the state for decades.

• Daily Herald wire services contributed to this report.