Simon Property Group to Acquire Stake In Taubman Centers for $3.6B

Simon Property Group and Taubman Centers have struck an agreement under which Simon will acquire an 80% ownership interest in The Taubman Realty Group Limited Partnership in what has been reported in Marketwatch to be an all-cash deal valued at about $3.6 billion.

Simon will acquire all of Taubman common stock for $52.50 per share in cash and the Taubman family will sell approximately one-third of its ownership interest at the transaction price and remain a 20% partner.

The purchase price represents a 6.2% underwritten capitalization rate.

Taubman owns, manages and/or leases 26 super-regional shopping centers in the US and Asia, for a total of 25 million square feet.

The two REITs have been holding on-and-off-again merger discussions since late last year, according to sources quoted by Bloomberg. Also, this is not the first time Simon has tried to acquire Taubman: in 2002 it attempted a tie up with the REIT. Simon has also tried to use its formidable balance sheet to acquire Macerich and more recently, Forever 21.

Taubman, like many retail landlords, has been struggling with a changing environment that has seen numerous retail bankruptcies and store closures, such as Macy’s recent announcement.

Partly as a response, it has sold off other pieces of its holdings recently. Last December it completed the sale of 50% of its interest in CityOn.Zhengzhou in Zhengzhou, China to the Blackstone Group for $89 million, retaining a 24.5% ownership interest in the center. The REIT received net proceeds of $47.5 million. The company also expects to complete the sale of its 50% interest in CityOn.Xi’an, in Xi’an, China to Blackstone in the first quarter of 2020. The sale price is $91 million and net proceeds are expected to be about $50 million.