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Bloomberg
Simon Property Group Inc agreed to buy rival US shopping-mall operator Taubman Centers Inc for about $3.6 billion, a combination that comes as e-commerce continues to roil brick-and-mortar retail.
Simon will pay $52.50 a share in cash for all of Taubman’s common stock, the companies said in a statement. That’s about 51% more than Taubman’s closing share price on Friday. Simon said it expects to fund the purchase with existing liquidity.
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 US 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.
Still, Simon was looking for a way to expand, and was attracted to Taubman’s portfolio of mall properties in a bid boost growth, according to Lindsay Dutch, an analyst at Bloomberg Intelligence.
The company needs to focus on its US malls, which have been hurt by store closings, and the deal may make room for that, according to Dutch.
The deal would mark the end of family control of Taubman, one the pioneers of the American mall industry.