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Simon Property (SPG) Backs Out of Taubman's Buyout Deal
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Simon Property Group, Inc. (SPG - Free Report) called off its merger agreement with Taubman Centers, Inc. by exercising its contractual rights to the termination.
Notably, in February, Simon Property agreed to acquire Taubman in a deal valued at $3.6 billion. Simon Property was to buy an 80% ownership stake in The Taubman Realty Group Limited Partnership ("TRG"). Further, it would have acquired all of Taubman’s common stock for $52.50 per share in cash.
However, with the termination of the deal, Simon also filed a lawsuit against Taubman, alleging that the latter has suffered a Material Adverse Event ("MAE") and has breached covenants of the merger agreement.
Specifically, the merger termination is based on two separate and independent grounds. First, the coronavirus pandemic has significantly impacted Taubman’s operations, relative to other retail real estate industry peers.
Notably, Taubman has been adversely impacted by the pandemic-induced dwindling footfall at its properties. In the current environment, the company’s notable exposure to enclosed retail properties situated in densely-populated major metropolitan areas, high dependence on domestic and international tourism at numerous properties, and focus on high-end shopping have exacerbated the impact.
Further, amid the pandemic-led mayhem, Taubman breached its obligations to operate its business in the ordinary course. Particularly, unlike others in the industry, the company was unable to take necessary steps to mitigate the impacts of the pandemic, including failing to make essential reductions in operating expenses and capital expenditure.
Simon believes that the merger agreement specifically gave the company the right to terminate the deal if a pandemic disproportionately impacted Taubman.
Nonetheless, Taubman is of the opinion that the acquirer’s merger termination is invalid and without merit, and that Simon is bound to the transaction in all respects. In fact, the company plans to hold Simon to its obligations as per the agreement and will pursue to challenge Simon’s termination and legal claims.
Taubman intends to resort to remedies to implement its contractual rights under the agreement, including the right to monetary damages and specific performance.
Shares of Simon Property have lost 49.8% over the past year compared with the industry’s decline of 16.5%.
It carries a Zacks Rank #3 (Hold) at present.
Stocks to Consider
Alexander Baldwin Holdings, Inc.’s (ALEX - Free Report) Zacks Consensus Estimate for 2020 funds from operations (FFO) per share has been unchanged at 83 cents over the past month. The company currently flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
One Liberty Properties, Inc.’s (OLP - Free Report) FFO per share estimate for the ongoing year has been unchanged at $1.89 over the past 30 days. The company currently flaunts a Zacks Rank of 1.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Simon Property (SPG) Backs Out of Taubman's Buyout Deal
Simon Property Group, Inc. (SPG - Free Report) called off its merger agreement with Taubman Centers, Inc. by exercising its contractual rights to the termination.
Notably, in February, Simon Property agreed to acquire Taubman in a deal valued at $3.6 billion. Simon Property was to buy an 80% ownership stake in The Taubman Realty Group Limited Partnership ("TRG"). Further, it would have acquired all of Taubman’s common stock for $52.50 per share in cash.
However, with the termination of the deal, Simon also filed a lawsuit against Taubman, alleging that the latter has suffered a Material Adverse Event ("MAE") and has breached covenants of the merger agreement.
Specifically, the merger termination is based on two separate and independent grounds. First, the coronavirus pandemic has significantly impacted Taubman’s operations, relative to other retail real estate industry peers.
Notably, Taubman has been adversely impacted by the pandemic-induced dwindling footfall at its properties. In the current environment, the company’s notable exposure to enclosed retail properties situated in densely-populated major metropolitan areas, high dependence on domestic and international tourism at numerous properties, and focus on high-end shopping have exacerbated the impact.
Further, amid the pandemic-led mayhem, Taubman breached its obligations to operate its business in the ordinary course. Particularly, unlike others in the industry, the company was unable to take necessary steps to mitigate the impacts of the pandemic, including failing to make essential reductions in operating expenses and capital expenditure.
Simon believes that the merger agreement specifically gave the company the right to terminate the deal if a pandemic disproportionately impacted Taubman.
Nonetheless, Taubman is of the opinion that the acquirer’s merger termination is invalid and without merit, and that Simon is bound to the transaction in all respects. In fact, the company plans to hold Simon to its obligations as per the agreement and will pursue to challenge Simon’s termination and legal claims.
Taubman intends to resort to remedies to implement its contractual rights under the agreement, including the right to monetary damages and specific performance.
Shares of Simon Property have lost 49.8% over the past year compared with the industry’s decline of 16.5%.
It carries a Zacks Rank #3 (Hold) at present.
Stocks to Consider
Alexander Baldwin Holdings, Inc.’s (ALEX - Free Report) Zacks Consensus Estimate for 2020 funds from operations (FFO) per share has been unchanged at 83 cents over the past month. The company currently flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
One Liberty Properties, Inc.’s (OLP - Free Report) FFO per share estimate for the ongoing year has been unchanged at $1.89 over the past 30 days. The company currently flaunts a Zacks Rank of 1.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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