The long-in-the-works merger between Simon Property Group and Taubman Centers is finally coming to fruition.
Michigan-based Taubman has agreed to take a price cut in Simon Properties’ buyout of the company, allowing the two to avoid pending litigation.
Simon, the country’s largest mall owner, will pay $43 a share for Taubman under the new deal, down from the original price of $52.50. Taubman has also agreed not to declare or pay a common stock dividend before March 2021, the Wall Street Journal first reported.
The companies were expected to go to court this week, the Journal reported.
Under the new terms of the takeover, the Taubman family will sell about one-third of its interest, remaining a 20 percent owner. Simon will acquire an 80 percent ownership interest, according to a press release.
The new deal means Simon receives a nearly 20 percent discount and savings of close to $800 million.
The two companies have danced around a deal for years. Simon first attempted a hostile takeover of Taubman in 2003. They finally reached an agreement in February that would have given the former control of the latter, but when malls shuttered and retail revenue plummeted due to the pandemic, Simon attempted to back out of the deal, claiming that Taubman did not sufficiently mitigate the impact of the pandemic.
Taubman, which operates high-end malls throughout the country, countered by saying it would sue Simon and force the company to complete the merger.
“Taubman believes that Simon’s purported termination of the merger agreement is invalid and without merit, and that Simon continues to be bound to the transaction in all respects,” the company said in a statement after it announced its intent to take the matter to court.
The companies were expected to head to court this week, the Journal reported, but the new deal allows them to avoid a lengthy court battle.
The merger is expected to close in late 2020 or early 2021, subject to Taubman shareholder approval and customary closing conditions.