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Mall Giants Simon and Taubman Move Forward With Merger — But With a Significant Price Cut

Taubman Centers Inc. and Simon Property Group Inc. are moving forward with their merger, allowing the companies to avoid a heated legal battle during the holidays.

The luxury shopping center and the country’s largest mall owner announced today that they entered into a definitive agreement that would modify certain terms of the original merger, which was arranged in February as the coronavirus pandemic was making its way into the United States.

Under the new deal, Simon will now pay $43 per share in cash and other provisions for Taubman — down from the original price of $52.50. The structure, however, remains the same, with Simon acquiring an 80% ownership interest in The Taubman Realty Group Limited Partnership, which is owned by Taubman Centers Inc. The Taubman family will sell roughly a third of its ownership interest at the transaction price and remain a 20% partner in TRG.

The companies’ boards of directors, as well as Taubman’s special committee of independent directors, have approved the terms of the agreement, which added that Taubman will not declare or pay a dividend on its common stock before March 1. The deal is expected to close late this year or in early 2021, subject to Taubman shareholder approval and customary closing conditions.

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In June, Simon announced that it would terminate the deal struck in February to acquire Taubman, which owns, manages or leases 26 shopping centers across the U.S. and Asia. At the time, the mall giant declared that the pandemic “disproportionately hurt” Taubman compared to competitors due to its “significant” amount of enclosed properties located in densely populated cities, focus on high-end shopping and “dependence” on domestic and international tourism.

Simon also said, at the time, that Taubman “failed to take steps” such as making cuts in operating expenses and capital expenditures to mitigate the impact of the pandemic. It also filed a lawsuit against Taubman in the Circuit Court for the Sixth Judicial District in Oakland County, Mich. Shortly thereafter, Taubman said that it believed Simon’s attempt to back out of the plan was “invalid and without merit, and that Simon continues to be bound to the transaction in all respects.”

Along with the merger news, Simon and Taubman shared that they have settled their pending litigation. The two were set to face each other in Michigan circuit court starting today in an effort to work out the contested deal.

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