Simon Has ‘No Interest’ in Acquiring Rival General Growth

By Brian Louis on September 11, 2012 Boomberg Business Week
A Simon Property Group Inc.executive said that the largest U.S. mall owner isn’t trying toacquire competitor General Growth Properties Inc. (GGP), whichannounced yesterday that it won’t put itself up for sale.
“We have no interest in General Growth,” Stephen Sterrett, chief financial officer of Indianapolis-based Simon,said today at a conference hosted by Barclays Plc’s investment-banking unit that was broadcast over the Internet.

Sterrett’s comments were the first a Simon Propertyexecutive has made about General Growth since investor Bill Ackman urged the Chicago-based company on Aug. 23 to consider asale. Ackman, founder of Pershing Square Capital Management LP,said at the time that Simon had shown interest in a plan to buyGeneral Growth.

Ackman, in an Aug. 27 letter to General Growth’s board,said Pershing Square made a 37-page presentation to David Simon,Simon Property’s chairman and chief executive officer, about aproposed deal in which Simon would pay 0.1765 a share for eachGeneral Growth share. Based on Simon’s closing price today,General Growth would be valued at $27.84 a share.

General Growth fell 2.5 percent to $20.09 in New Yorktrading today. The shares have gained 8.5 percent since Aug. 22,the day before Ackman first said publicly that the companyshould put itself up for sale. Simon Property rose 1 percent to$157.74 today.

‘Serious Interest’

David Simon “expressed serious interest” in pursuing thedeal, according to Ackman’s Aug. 27 letter. General Growthexited bankruptcy protection in November 2010 following atakeover battle between Simon and an investor group thatincluded Brookfield Asset Management Inc. (BAM/A) and Pershing Square,now General Growth’s two biggest shareholders. The mall ownerfiled for bankruptcy in 2009 after weighing itself down with $27billion of debt.

“There’s been a fair bit of speculation and inquiry latelyabout General Growth and our rumored interest in that company,and I think it’s important to respond and set the recordstraight,” Sterrett said today. “We have not made an offer forGeneral Growth or its properties since 2010, during GGP’sbankruptcy, nor have we subsequently agreed on any value for thecompany.”

Simon said in May 2010 that it offered $20 a share for itscompetitor, which was under court protection from creditors atthe time.

Ackman didn’t immediately respond today to a telephonemessage left at his New York office and an e-mail.

‘Best Value’

General Growth yesterday rejected Ackman’s call to putitself up for sale, a move supported by Brookfield.

“The board has unanimously determined that the best valuefor all shareholders will be achieved by GGP continuing toexecute on its well-conceived business plan,” Sandeep Mathrani,General Growth’s chief executive officer, said in a letter toAckman that was filed with the U.S. Securities and ExchangeCommission.


Brookfield executives “agree with the position unanimouslytaken by GGP’s board,” J. Bruce Flatt, chief executive officerof the Toronto-based real estate investor and chairman ofGeneral Growth, said yesterday in a letter to the mall owner’sshareholders. “GGP is currently performing extremely well andwe believe GGP is positioned for superior growth over the nextfive years versus any comparable retail mall investment.”