In our post "Simon Ups the Ante for General Growth Properties" we wrote about Simon Properties ("Simon") modifying its initial takeover bid for General Growth Properties ("GGP") by using a similar model to Brookfield Asset Management ("Brookfield"). Instead of attempting to merge two of the country's largest mall owners, Simon offered $6.5 billion, which included a $1 billion commitment from hedge fund Paulson & Co., to finance GGP's exit from bankruptcy as a standalone entity. In the Wall Street Journal's article "General Growth to Consider Buyout Bid From Mall Rival," Simon has once again restructured its bid to make it a more attractive option for GGP and its stakeholders.
Under Simon's revised proposal, it has offered to purchase GGP for $18.25 per share and to pay $7 billion in cash to eliminate GGP's unsecured debt. In addition, Simon would assume $20 billion of mortgages which are secured by GGP's malls. It seems that Simon has reverted to a complete buyout bid, rather than helping GGP to emerge from bankruptcy as a standalone entity. It is not clear which offer is better or which offer GGP prefers. Brookfield's last offer seemed costly to GGP shareholders because of the warrants baked into the deal structure. However, Simon's new bid presents the same antitrust concerns that we wrote about in our February post "Simon Bids for General Growth Properties."
U.S. Bankruptcy Judge Allan Gropper is set to review the Brookfield proposal on May 5, 2010 and could approve it as GGP's "stalking horse" bid, the benchmark for other offers.
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.
