Forum Shops partner to sell

Monday, March 3, 2003 | 10:50 a.m.

SUN STAFF AND WIRE REPORTS

Simon Property Group Inc. will pay $174 million in cash to buy out its partner in The Forum Shops at Caesars -- a move that will keep the Las Vegas mall out of the hands of Simon competitor Taubman Centers Inc.

Simon Chief Executive David Simon told analysts on a conference call Friday his company intends to acquire the remaining interest of The Forum Shops from its partner for $174 million, a Simon spokeswoman said today.

Indianapolis-based Simon's announcement is in response to a buy-sell provision initiated by Gordon Group Holdings LLC, an investor with Simon in The Forum Shops, which are in Las Vegas at the Caesars Palace resort on the Strip. The buy-sell provision was triggered by Simon's unfriendly takeover offer for Taubman.

Gordon on Jan. 13 announced it would sever ties with Simon by forcing the company to either buy or sell its stake in the property. Gordon's offer valued the mall at $415 million, or $590 million including debt.

If Simon had sold its 58 percent stake in the mall, Gordon would have become the sole owner and would have transferred a 33 percent interest in the mall to Taubman.

With Simon's announced acquisition Friday, Gordon will invest $50 million of the sale proceeds in Bloomfield Hills, Mich.-based Taubman.

Separately, Simon charged Friday that Taubman, the shopping mall empire built by A. Alfred Taubman, secretly rejected an acquisition offer from a rival in 1998.

Simon, the nation's largest owner of malls, said in a legal brief that the bid for Taubman Centers from the Rouse Co. prompted the Taubman family to pursue a restructuring transaction that would give it the power to block any takeover.

Maryland-based Rouse is the largest developer in Southern Nevada with its Fashion Show mall on the Strip, its Hughes Center office complex and its Summerlin master-planned community.

Simon Property has sued Taubman Centers and the Taubman family in U.S. District Court in Michigan to overturn its voting control, which the family received during the restructuring, so it can take over the company. So far, Taubman Centers, which owns two dozen malls including the Mall at Short Hills in New Jersey and the Beverly Center in Los Angeles, has rejected Simon Property's offer of $20 a share, or $1.74 billion.

Legal experts suggested on Friday that the offer by Rouse, which bid $17.50 a share, could bolster Simon Property's argument that Taubman Centers breached its fiduciary duty to shareholders.

Taubman Centers had said that the restructuring was prompted by the General Motors Pension Trust, which wanted to swap its investment in the company's operating partnership for direct control of 10 malls.

Simon Property contends that Rouse's offer was "rejected by the board and concealed from the shareholders because of the Taubman family's ardent wish to avoid a sale."

Taubman Centers, based in Bloomfield Hills, Mich., said on Friday: "The Rouse letter was a nonevent in 1998 and it's a nonevent now. It had no bearing on the restructuring, which had been commenced months earlier." The company said that Rouse's offer letter "was a tentative indication of possible interest, the type of letter that companies get all the time and that are rarely disclosed." It added, "The board decided no response was necessary and Rouse did not pursue it."