Simon axes $3.6B Taubman buy

Mall operator cites Covid-19 for deal's demise

National /
Jun.June 10, 2020 09:56 AM
Robert Taubman of Taubman Centers and David Simon of Simon Property Group (Getty, iStock)

Robert Taubman of Taubman Centers and David Simon of Simon Property Group (Getty, iStock)

Mall giant Simon Property Group is axing its $3.6 billion deal to buy Taubman Centers — the latest megadeal to fall apart due to the coronavirus.

Simon executives on Wednesday said Taubman breached the contract by failing to take measures to mitigate the impact of the pandemic.

“The merger agreement specifically gave Simon the right to terminate the transaction in the event that a pandemic disproportionately hurt Taubman,” Simon said in a statement. And Taubman’s holdings — which largely have high-end retailers, are located in major markets and rely on tourism — were “disproportionately” hit by fallout from Covid-19 “when compared to the rest of the retail real estate industry.”

Simon, the country’s largest mall owner, agreed to buy an 80 percent stake in Taubman in February. The mall giant had tried two decades earlier to buy Taubman, which Simon prized for its collection of high-quality properties.

Observers had long noted that the two companies would make a good fit with one another. Simon’s portfolio of 233 malls, outlets and other properties in North America, Europe and Asia are valued at about $100 billion, according to Green Street Advisors.

Taubman is a much smaller company with interests in just 24 properties, valued by the advisory firm at about $11 billion. But it’s widely viewed by industry experts to be the highest-quality mall operator in the country with the best anchor tenants and mix of stores.

The company has been tightly held since 1950 by the Taubman family which, successfully fended off a hostile takeover bid by Simon and Westfield in 2003. But Simon persisted, and as part of the deal the two sides struck in February, the Taubmans maintained a 20 percent stake in the company.

The acquisition, however, came into question once the coronavirus forced malls across the country to temporarily shut their doors. Initially, both parties initially they were determined to finalize the deal.

It’s the latest big-ticket deal to fall apart due to complications from the coronavirus. And if the other failed deals are any indication, more is yet to come in court.

Anbang Insurance Group, for example, reached an agreement last year too sell its 15-property hotel portfolio to the South Korean financial services firm Mirae Asset Global Investments for $5.8 billion. The deal fell apart though, and both sides are in court wrestling over the $582 million deposit.


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