Giant mall developer Simon Property Group revised its offer for rival General Growth Properties Inc. Simon offered to match the terms of a proposal from another bidder, Brookfield Asset Management Inc., to finance General Growth’s exit from bankruptcy,
the
Wall Street Journal
reported.
Simon’s latest offer, which includes $1 billion from hedge fund Paulson & Co., is a marked departure from its earlier efforts to acquire General Growth in entirety. Those efforts had been stymied by General Growth’s concerns about antitrust issues from combining the two largest mall owners in the U.S. But Simon’s new tack still could put it in position to eventually make a play for all of General Growth. That’s because displacing Brookfield as the cornerstone investor in General Growth’s recapitalization plan would leave Simon as one of General Growth’s largest shareholders with few, if any, competitors vying for the rest of the company.
Simon’s offer differs from Brookfield’s in that the latter proposal requires that Brookfield and two General Growth investors, Fairholme Capital Management and Pershing Square Capital Management LP, receive 120 million warrants to buy General Growth stock at $15 a share, the
Journal
report noted.
In essence, Simon’s offer is a gamble that Brookfield, and perhaps Fairholme and Pershing, will abandon their offer rather than matching Simon’s pledge to forgo the warrants.
(Source:
Wall Street Journal,
April 15, 2010.)
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