$$ Simon Pulls Out….. GGP Shareholders Not Sure He Was Really In

• Posted by ToddSullivan
• on May 7th, 2010

“Don’t ever get emotional about money Buddy….” Gordon Gekko

Simon Property Group, Inc. (NYSE: SPG) (“SPG”) today announced that it has withdrawn its fully financed acquisition and recapitalization proposals for General Growth Properties, Inc. (NYSE: GGP) (“GGP”).

David Simon, Chairman and Chief Executive Officer, said, “GGP’s decision to move forward with the latest Brookfield-sponsored change of control recapitalization, without giving due consideration to SPG’s proposals, is a truly unfortunate result for all GGP stakeholders. The transaction approved today values GGP at a minimum of $5.00 less per share than SPG’s $20.00 per share offer, when accounting for the highly expensive and dilutive warrants to be issued to the Brookfield consortium.”

Simon continued: “We are disappointed that the GGP board hastily decided in less than 24 hours to accept substantially less value, rather than take more time to fully assess the benefits of SPG’s offer and enter into negotiations to make this value available to GGP shareholders. In addition, SPG’s recapitalization proposal offered the certainty GGP desired along with an $11.00 per share value, which is also substantially higher than what GGP shareholders will receive under the plan approved today, after taking the highly expensive and dilutive warrants into account.”

Simon added: “For many months, SPG has tried to work collaboratively and productively with GGP to bring our proposals to fruition. SPG has been highly flexible, making numerous changes to its proposals in response to requests from GGP, its stakeholders and its advisors. GGP’s decision to proceed with a transaction that transfers hundreds of millions of dollars in value to the Brookfield consortium has caused us to conclude that we cannot reach a mutually beneficial transaction with GGP. As a result, it is in SPG’s best interests to withdraw our proposals and decline to participate in the bidding process in the GGP bankruptcy.”

Simon concluded, “I am confident in our ability to grow the business as we have done historically. We will continue to focus on our business and evaluate other opportunities in the marketplace as we always have: prudently, in a disciplined manner, and in the best interests of our shareholders.”

This strikes me as a bit of a tantrum…a lot actually. Step back and look at it. We are talking about a $33B deal including debt. Are we really to believe SPG will walk away over a few hundred million?

Remember on Feb. 5th SPG said they were not in active negotiations with GGP only to make an offer 11 days later. A few days after that they threatened to rescind that offer in a huff after it was rejected. When the BAM offer was accepted, SPG had a tantrum then also.

Simon also said the FTC would not be an issue only to then agree to dispose of $15B of properties to alleviate potential FTC issues.

After submitting a “superior” $18.25  final offer, SPG then upped it to $20 in a last minute effort.

Now this….. what is the point? I do not believe for a second David Simon is done with this. He is acting emotionally and childish….goes to show how bad he wants it…

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