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Simon Property Group to Acquire Retail REIT Taubman Centers for USD 3.6bn
Wednesday 12 February 2020

12 February 2020 - US-based real estate investment trust Simon Property Group, Inc. (NYSE: SPG) and shopping centre REIT Taubman Centers, Inc. (NYSE: TCO) have entered into a definitive agreement under which Simon will acquire an 80% ownership interest in The Taubman Realty Group Ltd. Partnership, the firms said.

Simon, through its operating partnership, Simon Property Group, L.P., will acquire all of Taubman common stock for USD 52.50 per share in cash and the Taubman family will sell approximately one-third of its ownership interest at the transaction price and remain a 20% partner in TRG.

TRG is engaged in the ownership, management and/or leasing of 26 super-regional shopping centers in the US and Asia.

TRG's ownership includes 24 high-quality retail assets (including 21 in the United States and 3 in Asia), consisting of approximately 25m feet of gross leasable area, and will continue to be managed by its existing executive team, under a leadership of Taubman chairman, president and chief executive officer Robert S. Taubman, in partnership with Simon.

The parties have agreed to work together to implement best practices to achieve operational efficiencies and will eliminate Taubman's public company costs immediately following closing.

This transaction has been unanimously recommended by a Special Committee of independent directors of Taubman and approved unanimously by the boards of directors of both companies. Simon expects to fund the total required cash consideration of approximately USD 3.6bn with existing liquidity.

The transaction price of USD 52.50 per share in cash represents a 51% premium to TCO's closing price on February 7, 2020 and a 19% premium to total enterprise value, which includes debt and preferred equity.

This transaction is expected to be at least 3% accretive to Simon's Funds From Operations per share on an annualized basis, beginning immediately upon consummation of the transaction.

Simon is a real estate investment trust engaged in the ownership of shopping, dining, entertainment and mixed-use destinations (NYSE: SPG).

Taubman Centers is engaged in the ownership, management and/or leasing of 26 regional, super-regional and outlet shopping centres in the US and Asia. Founded in 1950, Taubman is headquartered in Bloomfield Hills, Mich. Taubman Asia, founded in 2005, is headquartered in Hong Kong. 

BofA Securities is serving as financial advisor to Simon and Paul, Weiss, Rifkind, Wharton and Garrison LLP and Latham and Watkins LLP are serving as legal advisors. Goldman Sachs and Co. LLC is serving as financial advisor to Taubman and Wachtell, Lipton, Rosen and Katz and Honigman LLP are serving as legal advisors.

The special committee of the board of directors of Taubman has retained Lazard as its independent financial advisor and Kirkland and Ellis LLP as its independent legal counsel.
Date Published: 12/02/2020
Target: Taubman Centers, Inc
Country: USA
Deal Size: 3.6bn (USD)
Sector: Construction/Real Estate
Type: LBO
Financing: Cash
Status: Agreed
Buyer: Simon Property Group
Buyer Advisor: BofA Securities , Paul, Weiss, Rifkind, Wharton and Garrison