Luxury mall owner Taubman Centers (NYSE:TCO) has agreed to a lower price to merge with the biggest mall owner in America, Simon Property Group (NYSE:SPG), the companies announced Sunday, evading what could have been a heated legal battle during the holidays.
Under the new deal, Simon will now pay $43 per share for Taubman, down roughly 18% from an original price of $52.50.
The companies also said that they have settled their pending litigation. Simon and Taubman were set to face each other in Oakland County Superior Court in Michigan, beginning Monday, to negotiate the contested deal.
In February, prior to the coronavirus pandemic arriving in the United States, Simon had agreed to buy Taubman in a deal valued at $3.6 billion, eyeing Taubman’s 26 high-end malls that include a handful in Asia.
But the company then announced in June that it was exercising its contractual rights to terminate the deal. Among other things, Simon was arguing that Taubman’s portfolio of shopping malls were suffering more than some of its peers’ during the pandemic, due to lack of tourism and luxury spending.
Taubman quickly filed a counterclaim, and the two were headed to court.
But the announced revised terms signal there is hope in the retail real estate industry that traffic will rebound at America’s best malls once a vaccine for Covid-19 is widely distributed and consumers regain confidence to head back to stores to shop.
Taubman shares vaulted $3.24, or 8.2%, to $42.74 Monday, while Simon jumped $4.99, or 6.7%, to $79.69.
