In our post "Brookfield Bids for General Growth Properties" we wrote about Brookfield Asset Management's ("Brookfield") $15 per share bid for General Growth Properties ("GGP"). In last week's Wall Street Journal Article "Simon Remakes Offer for Rival" it was reported that Simon Properties ("Simon") modified its initial takeover bid for GGP by using a similar model to Brookfield. Instead of attempting to merge two of the country's largest mall owners, Simon has decided to offer $6.5 billion, which includes a $1 billion commitment from hedge fund Paulson & Co., to finance GGP's exit from bankruptcy as a standalone entity. If Simon's bid is accepted, it would become one of GGP's largest shareholders. The revised deal structure is due to GGP's antitrust concerns over combining two of the largest domestic mall operators.
Brookfield's proposed offer of $6.5 billion is contingent upon the issuance of 120 million warrants to Brookfield and GGP's other main investors, Fairholme Capital Management ("Fairholme") and Pershing Square Capital Management LP ("Pershing"). Under Brookfield's proposed offer it would contribute $2.63 billion in exchange for 60 million warrants or a 26% equity stake, Fairholme would contribute $2.71 billion in exchange for 42.5 million warrants or a 28% equity stake and Pershing would add $1.11 billion to the pot in exchange for 17.5 million warrants or a 11% equity stake in addition to its current holdings. Unlike Brookfield's proposed offer, Simon would not receive warrants.
On April 29 GGP will propose to the U.S. Bankruptcy Court which bid it prefers.
Matthew L. Holden is a New Jersey real estate attorney representing clients throughout New York and New Jersey. Founded by Matthew L. Holden, The Law Offices of Matthew L. Holden, LLC is located in Hackensack, New Jersey.
