The country’s largest mall owner Simon Property Group Inc.’s SPG attempt to take over The Macerich Company MAC, the third-largest mall owner, is reaching its climax. On Friday, Simon Property raised its hostile bid for rival Macerich 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. The Indianapolis, IN-based Simon Property provided a deadline of Apr 1 for Macerich to consider this revised offer, after which the offer will stand withdrawn.
Notably, the board of directors of the Santa Monica, CA-based Macerich unanimously declined Simon's original offer citing the reason that it significantly undervalued the company. Further, Macerich contended that Simon’s intention to partner with General Growth Properties, Inc GGP, the second-largest mall owner in the country, would give rise to serious anti-trust concerns (read more: Macerich Rejects Simon's $16B Unsolicited Takeover Offer ).
In an industry which sees limited scope for organic growth, leading players are keenly eyeing the high-end retail properties, thereby fueling further consolidation in the market. Macerich’s unmatched portfolio of properties, including the highly profitable Biltmore Fashion Park in Phoenix and Tysons Corner Center outside Washington, D.C., has enticed Simon Property to increase its offer value.
The shares of Simon climbed 2.7%, while Macerich’s shares fell 4.6% in Friday’s trading. However, Macerich, confirming the receipt of the new offer, has agreed to review it.
Now the ball rests in Macerich’s court. In case the company declines the new offer too, it may face pressure from its shareholders for reconsidering the decision.
Currently, Macerich, Simon Property and General Growth Properties all carry a Zacks Rank #3 (Hold).
A better-ranked retail-REIT stock is Acadia Realty Trust AKR, which holds a Zacks Rank #2 (Buy).
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