The board of directors of Macerich unanimously rejected the takeover proposal of Simon Property Group for $91 per share in cash and stock.

The board believes that the offer substantially undervalues the company, and it is not in the best interest of shareholders.

The stock value of Macerich declined almost 3% to $92.07 per share at the time of this writing around 11:27 A.M. in New York.

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Takeover offer does not reflect full value of Macerich portfolio

In a statement, Macerich Chairman and CEO Arthur Coppola said, “After careful consideration, the Macerich board of directors unanimously determined that Simon Property Group’s unsolicited proposal significantly undervalues Macerich and fails to reflect the full value of our portfolio of unique and irreplaceable assets and our positive growth prospects.”

Macerich is one of the leading owners, developers and operators of retail properties in the United States. The company said it has a dynamic portfolio of unique and irreplaceable assets in strategic and high-barrier-to-entry markets around the country.

Over the past five years, the company achieved total shareholder returns of 186%, which represents a compounded annual return of 23%. Its shareholder returns outperform the RMZ REIT Index and the S&P 500 over the past one, three, five and ten year periods.

According to Coppola, Macerich transformed Macerich’s portfolio by selling lower quality malls to fund its highly-value accretive development pipeline over the past two years.

The company’s portfolio of Class-A properties and developments are extremely attractive to retail partners looking to grow in primary locations in the country.

“We believe that our continued focus on portfolio transformation, productivity enhancement and development opportunities will deliver industry-leading growth and significantly greater value to Macerich stockholders than Simon’s proposal,” added Coppola.

Factors considered by Macerich board in rejecting the takeover offer

According to Macerich, its board of directors considered several factors in rejecting the Simon Property Groups takeover offer including the following:

  • The irreplaceable nature of its portfolio of high quality, regional shopping centers in prime locations
  • The board’s confidence in the strategic plan of Macerich and ability to execute it
  • The company’s success in transforming its portfolio over the past two years by selling lower quality malls and reinvesting the capital into value-enhancing redevelopment opportunities, which increased its sales from $517 to $587 per square foot
  • Macerich’s development pipeline is highly-valuable. The company plans to spend $400 million to $500 million annually on high-return-on-cost projects over the next five years. The projects are expected to materially enhance stockholder value.
  • Macerich’s inability to evaluate the claims of Simon Property Group regarding its margins because it does not disclose separate performance data between mall and outlet portfolios
  • The board of directors of Macerich believed that there are significant challengers in consummating the proposed transaction of Simon Property Group due to serious questions under applicable state and federal laws
  • Macerich’s board also believed that the Simon Property Group’s partnership with General Properties raises legality questions and stockholder-unfriendly.