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Simon and Taubman Agree on Revised $3B Merger

All it took was a little more time to renegotiate a price reduction to convince mall giant Simon Property Group to move forward with its planned Taubman Centers merger.

Under the terms of the new deal, Simon will pay $43.00 per share, valuing the transaction at $3 billion, versus the original $3.6 billion deal, or $52.50 per share. The companies adjusted other provisions as well to reduce “closing conditionality,” they said Sunday evening.

Simon will still acquire an 80 percent majority stake in The Taubman Realty Group Limited Partnership. The Taubman family will sell about one-third of their ownership interest at the transaction price, and remain a 20 percent partner in Taubman Realty Group. According to Simon and Taubman, the boards of directors at both firms, including the special committee of independent directors of Taubman, have approved the terms of the deal.

The transaction is expected to close in late 2020 or early 2021, subject to Taubman shareholder approval and customary closing conditions.

The initial agreement was inked back in February before the coronavirus pandemic temporarily closed nonessential retail stores. In June, as many retailers and malls were still in the early stages of reopening, Simon backed out of the deal. The matter went to litigation and, in the interim, mediation. With the new deal on pricing, the parties have settled their pending litigation.

The Simon-Taubman wasn’t the only one to see some kind of change following the Covid-19 outbreak.

Private equity firm Sycamore Partners in April walked from its planned deal with L Brands to acquired a 55 percent stake in Victoria’s Secret for $525 million. And in September, nearly a year after LVMH Moët Hennessy Louis Vuitton signed its deal to acquire Tiffany & Co. at a per-share-price of $135, or a total deal value of $16.2 billion, the French conglomerate also balked and elected not to go through with the planned purchase. Last month, the two made up and agreed to revise the purchase price to $131.50 per share, giving the transaction a new valuation of $15.8 billion.

Elsewhere in the REIT world, CBL and Pennsylvania Real Estate Investment Trust both filed for Chapter 11 bankruptcy earlier this month, succumbing to months of pressure as retail tenants have sought rent concessions, drying up a sizable source of revenue.