Retail real estate Investment trust (“REIT”) – Simon Property Group Inc. SPG – on Apr 2, announced a share buyback authorization of up to $2 billion of its common stock after withdrawing its $16.8 billion takeover bid for The Macerich Company MAC. Reflecting positive sentiments, the shares edged up 0.69% during the last trading session.
Simon Property revealed that as per prevalent market conditions, the share repurchase would take place over the next 2 years, either in the open market or through privately negotiated deals.
We believe that this share buyback marks a strategic fit for Simon Property, boosting shareholders’ value. Notably, only last week, Macerich, the Santa Monica, CA-based retail REIT, rejected Simon Property’s revised and unsolicited acquisition proposal for $95.50 per share in cash and stock.
Macerich argued that the revised proposal, too, undervalued the company and was not in the best interests of its shareholders. On the other hand, Simon withdrew its offer due to Macerich’s decision to ‘not engage in discussions with Simon’.
It was earlier in March, when Simon Property made a $16-billion hostile takeover bid for Macerich to attain a higher scale. But Macerich rejected that initial bid on grounds that the offer substantially undervalued it and would not cater to the best interests of its shareholders. Subsequently, Simon Property raised its hostile bid by 5% to $16.8 billion ($95.50 per share from its original offer of $91 per share), declaring it as the best and final offer. However, the deal did not materialize.
Currently, both Macerich and Simon Property carry a Zacks Rank #3 (Hold). Investors interested in the retail REIT industry may consider stocks like Acadia Realty Trust AKR and American Realty Capital Properties, Inc. ARCP. Both stocks hold a Zacks Rank #2 (Buy).
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