Top mall operator Simon Property offers to buy No. 2 General Growth
Simon Property Group Inc., the nation’s largest mall operator, offered to buy General Growth Properties Inc. out of Chapter 11 bankruptcy protection for more than $10 billion in a deal that would give shareholders -- typically left empty-handed in bankruptcy reorganization -- $9 a share.
The Indianapolis company said it sent an offer letter to acquire Chicago’s General Growth on Monday but hadn’t received a response.
General Growth is the No. 2 U.S. mall operator and counts among its Southern California properties the Glendale Galleria, Northridge Fashion Center and Burbank Town Center. The company owns or manages more than 200 malls nationwide, including the Grand Canal Shoppes at the Venetian in Las Vegas.
Simon Property has 382 properties; in Southern California, the malls include Del Amo Fashion Center and Brea Mall. Combining the two entities would create a shopping center behemoth that would hold great sway over setting retail rents for major chain stores such as the Gap and Pottery Barn.
It had been anticipated for months that Simon would make a run at part or all of General Growth.
General Growth had no immediate comment.
The offer calls for Simon to repay in full all unsecured creditors along with some bondholders and lenders holding a combined $7 billion in debt, Simon said. Shareholders would receive $6 a share in cash and $3 a share in certain General Growth assets.
The official committee of General Growth’s unsecured creditors has advised Simon that it supports the offer, Simon said in a news release Tuesday.
The deal follows overtures from Brookfield Asset Management, which bought almost $1 billion in unsecured debt in the last year, giving it a say in the reorganization’s outcome.
General Growth filed the biggest real estate bankruptcy reorganization in history in April after an acquisition spree left the company with $27 billion in debt.
General Growth shares climbed 28% to $12.02. Simon Property shares rose 4% to $74.82.
