Simon increases offer for General Growth

Simon Property Group Inc. revised its offer for rival General Growth Properties Inc., pledging to invest $2.5 billion in a reorganization and match the terms of a bankruptcy exit plan led by Brookfield Asset Management Inc.

The proposal includes a $1 billion co-investment commitment by Paulson & Co., Indianapolis-based Simon said Wednesday. Simon said the plan is more favorable to General Growth shareholders than Brookfield’s offer because it doesn’t include the issuance of warrants. General Growth, operator of the Glendale Galleria, would emerge from bankruptcy as an independent company under both plans.

Simon, the largest U.S. mall owner, offered $10 billion in February to take over Chicago-based General Growth, which dismissed the bid as too low. General Growth instead said it would reorganize under a $6.55 billion plan by Brookfield, Pershing Square Capital Management and Fairholme Capital Management.

Simon would buy 250 million shares at $10 each under the new offer, which it said is the same amount Brookfield would acquire under its plan and the same price. It would also agree to the same terms as Brookfield’s plan for the recapitalization of the company and planned spinoff of a new entity, Chief Executive David Simon wrote in a letter to General Growth CEO Adam Metz that was included in the statement.

The removal of warrants would provide shareholders a benefit of at least $895 million, or $2.75 a share, Simon said.

David Keating, a spokesman for General Growth, couldn’t immediately comment.

General Growth filed the largest real estate bankruptcy in U.S. history last April after amassing $27 billion in debt making acquisitions. Its properties include New York’s South Street Seaport and Boston’s Faneuil Hall.