Simon Property Group Inc. shot back Wednesday at General Growth Properties Inc.’s rebuff of Simon’s $10 billion takeover bid in a strongly worded letter that urged serious talks and warned the offer “is not open-ended.”
The letter from chairman and chief executive officer David Simon addressed to General Growth ceo Adam Metz called on him to accept the unsolicited bid for Simon Property’s bankrupt rival as being in the best interests of General Growth’s shareholders and creditors.
For the entire text of David Simon’s letter, click here.
“I want to reiterate that our offer is not open-ended, and we have a number of other opportunities under consideration,” Simon wrote. “We sincerely hope you will engage seriously with us without further delay.”
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Simon emphasized the advantages of doing a deal with Simon now rather than going forward with the bankruptcy process. General Growth said Tuesday that Simon’s offer wasn’t sufficient “to preempt the process we are undertaking to explore all avenues to emerge from Chapter 11 and maximize value for all the company’s shareholders.”
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Simon differed strongly. “This is the only offer for General Growth which provides a full cash recovery for unsecured creditors while reducing risk and providing potential upside,” he wrote. “It is far superior to any third-party proposal or stand-alone plan that would result from your ‘process.’ Proceeding expeditiously to complete our transaction would prevent an extended period of market risk for your stakeholders.
“In addition, our offer would remove the serious downside risks associated with a recapitalization, the value of which would be inherently uncertain and subject to future market conditions, even if a recapitalization could be secured.”
The letter said Simon property had tried unsuccessfully to explore an acquisition for months: “Time and time again, serious engagement with us has been pushed off into some indefinite future when you might start to begin to commence a ‘process.’”
Simon wrote the $10 billion offer is “firm” and “fully financed” and offers an immediate full cash recovery to unsecured creditors, plus “more than $9 per share in value to shareholders.” Simon Property has said General Growth’s unsecured creditors committee, representing those who are owed about $7 billion, supports the offer.
Simon noted that, with “the clear risks of pursuing an alternative plan, the current state of the retail industry and your company’s past history of risky financial choices, your lack of urgency should deeply concern creditors and shareholders. Time is passing and General Growth is inappropriately speculating with creditors’ money.”
General Growth in April filed the biggest real estate bankruptcy in U.S. history with a $27 billion debt load.
Simon’s shares rose $1.03, or 1.4 percent, to close at $75.85 on Wednesday, and General Growth gained 90 cents, or 7.5 percent, to $12.92.