Simon Property pulls bid for General Growth

LOS ANGELES -- Simon Property Group Inc. on Friday withdrew its $6.5 billion bid to acquire rival shopping mall owner General Growth Properties Inc., the owner of many major shopping malls in Las Vegas, following a bankruptcy court ruling that Simon said would have made the deal too expensive.

The move ends a months-long campaign by the nation's largest shopping mall owner to take over its closest competitor. It was an unlikely bidding war for a company that just more than a year ago had the dubious honor of being the biggest real estate bankruptcy case in U.S. history.

The plan approved by U.S. Bankruptcy Court Judge Allan Gropper in New York should enable General Growth to emerge from Chapter 11 bankruptcy protection as a standalone company. Under the plan, General Growth would receive $6.5 billion from an investor group led by Canadian property manager Brookfield Asset Management Inc.

But the deal also included a breakup fee that would give the Brookfield consortium hundreds of millions in stock warrants if General Growth went with another bidder.

Simon Property said that would make any acquisition too costly, and abandoned its latest offer Thursday of $6.5 billion, or $20 a share.

"We cannot reach a mutually beneficial transaction," Simon Property Group Chairman and CEO David Simon said Friday.

Simon also blasted the General Growth board of directors, saying it "hastily decided in less than 24 hours to accept substantially less value."

General Growth CEO Adam Metz said late Friday the Brookfield-led plan serves as an "insurance policy" for General Growth because it gives the company the funds it needs to exit bankruptcy while also allowing it to pursue other potential offers.

Simon is the largest U.S. shopping mall owner. It popularized the lifestyle center mall design that turned malls into neighborhood-like communities. It owns more than 380 properties, including the Houston Galleria and the Fashion Valley Mall in San Diego.

In Las Vegas, General Growth owns the Boulevard, Meadows and Fashion Show malls, the Grand Canal Shoppes at The Venetian and the Shoppes at Palazzo. Simon Property owns the Forum Shops at Caesars, the Las Vegas Premium Outlets and the Las Vegas Outlet Center.

General Growth shares fell $1.77, or 11.17 percent, Friday to close at $14.07 on the New York Stock Exchange. The stock added 3 cents, or 0.21 percent to reach $14,07 at 3 p.m. PDT in aftermarket trading.

Also on the NYSE, Simon Property shares rose 80 cents, or 0.94 percent, to $85.68, while shares in Brookfield rose 95 cents, or 3.99 percent, to $24.76.

The Las Vegas Review-Journal contributed to this report.