Simon Property Group Inc., the biggest U.S. mall operator, on Monday agreed to buy rival Taubman Centers Inc. in a deal valued at $3.6 billion.
Taubman's shares (TCO) jumped 53.2%, trading above the offer price of $52.50. They had closed at $34.63 on Friday. Simon Property Group's shares (SPG) inched up 1.4%.
Simon said it would buy an 80% stake in Taubman Realty Group (TRG) Ltd Partnership, the entity through which Taubman Centers conducts its business.
Taubman family will sell about a third of its interest in TRG and remain a 20% partner in the firm, the companies said.
Taubman's stock has climbed nearly 23% since a media report on Feb. 4 said Simon was holding deal talks with the company.
Simon could drive improved cash flows at Taubman due to its "long demonstrated ability to increase net operating income above the normal operations of a mall," said Piper Sandler analyst Alexander Goldfarb.
The acquisition comes against the backdrop of falling U.S. mall traffic as customers switch to online shopping and could help Simon boost its ability to negotiate leases with retailers.
Taubman owns or leases 26 regional shopping centers in the United States and Asia, while Simon has stakes in more than 220 malls and other retail properties in the United States and international markets.
The deal is expected to close by the middle of 2020.
BofA Securities is financial adviser to Simon. Paul, Weiss, Rifkind, Wharton and Garrison LLP, and Latham and Watkins LLP are its legal advisers.
Goldman Sachs is the financial adviser to Taubman and Wachtell, Lipton, Rosen & Katz and Honigman LLP its legal advisers.
The special committee of Taubman's board has retained Lazard as its independent financial adviser and Kirkland & Ellis LLP as its independent legal counsel.
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