Forum Shops’ owner’s latest offer is rejected

Tuesday, Jan. 21, 2003 | 10:47 a.m.

SUN STAFF AND WIRE REPORTS

BLOOMFIELD HILLS, Mich. -- Taubman Centers Inc. today rejected Simon Property Group Inc.'s $20-a-share offer to take over the rival mall owner, saying the company isn't for sale.

Simon Property, the largest mall owner and majority owner of the Forum Shops at Caesars in Las Vegas, raised its offer to buy Bloomfield Hills, Mich.-based Taubman Centers for a second time last week to about $4.25 billion in stock and debt. Westfield America Inc., the U.S. unit of one of Australia's biggest property owners, joined Simon Property in the bid.

Taubman Centers said the bid doesn't reflect the value of its newer malls, which will generate better returns. Taubman Centers urged its investors to reject a tender offer from Simon Property for common shares. The Simon bid, which depends on winning a court battle challenging the Taubman family's controlling stake, is a "futile effort," said Chief Executive Officer Robert Taubman.

Simon's bid "hinges on the response they get to the tender offer at this time," said Lisa Kaufman, senior vice president of LaSalle Investment Management, Taubman Centers' fourth-largest non- family shareholder.

Taubman shares fell 41 cents to $16.83 as of 10:32 a.m. in New York Stock Exchange composite trading. Simon Property shares rose 1 cent to $32.31.

Mall developer Gordon Group Holdings LLC earlier agreed to invest as much as $58 million in Taubman Centers, or about $24 a share, a level that signals what the Taubman family views as the true value of its shares, investors said.

Gordon Group is Simon's partner in the Forum Shops. Gordon has offered to buy out Simon's interest in the Las Vegas mall, triggering a provision requiring Simon to either sell its interest in the property to Gordon or to buy out Gordon's interest. Gordon's move may help fend off Simon's takeover bid for Taubman.

Indianapolis-based Simon Property has said it will end its bid unless two-thirds of Taubman Centers shareholders agree to tender their shares by Feb. 14. Taubman Centers said today that Taubman family members and other shareholders that own more than one-third of its shares have indicated they're not interested in selling. The company's charter requires that any transaction receive approval of shareholders owning two-thirds of the shares.

"There's no way to get this done; it is a completely futile attempt," said CEO Taubman. Goldman, Sachs & Co. advised Taubman Centers in its consideration of the offer, the company said.

Simon Property is challenging in court a transaction between Taubman Centers and General Motors Pension Trusts in 1998 that led to the Taubman family obtaining a series of preferred shares to gain its stake. Taubman Centers has asked that the suit be dismissed.

"Depending on how many of the common shares are tendered, if Simon gets a good response, that will help in their legal battle and may have an impact on the board," LaSalle's Kaufman said.

Simon Property wants to acquire Taubman Centers to gain its 30 malls, a collection analysts call one of the most profitable in the U.S. based on retail sales. Some of its properties include Beverly Center in Los Angeles and the Mall at Short Hills in northern New Jersey.

Simon Property owns 249 malls, including the Mall of America in Bloomington, Minn., the largest mall in the nation.