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Board at Taubman Nixes Simon Offer

NEW YORK — Taubman Centers Inc.’s board just said no.<br><br>That was the official, and expected, response Wednesday to the $1.5 billion, or $18 a share, hostile takeover offer from Simon Properties.<br><br>Robert Taubman, chairman,...

NEW YORK — Taubman Centers Inc.’s board just said no.

That was the official, and expected, response Wednesday to the $1.5 billion, or $18 a share, hostile takeover offer from Simon Properties.

Robert Taubman, chairman, president and chief executive officer, told WWD in a telephone interview, “This was a unanimous board decision. They have said now for the second time, unanimously, that the company is not for sale. This is not the time for a sale.”

According to the ceo, the company has great growth prospects, is making money and continues to generate increases in year-over-year returns. He noted that the company’s assets, both scarce and rare, are getting more valuable every day.

Taubman stated, “Our board understands the imbedded growth in our assets and the growth going forward.”

He said of the offer: “Simon wants to shake the trees and see what happens. The hostile offer shows a lack of ability of the company to meet growth opportunities on its own.”

The Taubman Centers board recommended that all Taubman shareholders reject Simon’s offer and not tender their shares.

As reported, Simon made its first offer to buy Taubman last month at $17.50 a share.

Simon said Wednesday in a statement following Taubman’s official response that Taubman’s “public shareholders, who own 99 percent of the company, should be the ones who decide whether Simon’s all-cash $18 offer — a price higher than the shares have ever traded — is ‘inadequate.’ We are proceeding with our tender offer and litigation to challenge Taubman’s continuing efforts to disenfranchise its public shareholders.”

According to a real estate investment trust (REIT) analyst, Taubman had traded in the $16 range in April, but prior to the offer was trading at about $13. The stock is now trading at slightly over $16 a share.

Simon also filed a lawsuit in a federal court in Michigan, invoking the state’s Control Share Acquisition Act, which was enacted to protect firms in the state that may be ripe for a takeover.

The Taubman family holds roughly 30 percent of the voting rights in Taubman Centers. It could block any takeover bid with the help of shares held by friends and associates. The lawsuit, if it invalidated the family’s control, would give Simon a chance to obtain a winning two-thirds majority for its bid.

Taubman Centers said on Wednesday that it opted out of the Michigan Control Share Acquisition Act. Simon said that the opt out was done to “avoid a shareholder referendum” on its offer.

Simon reconfirmed that it was proceeding with its offer, which is set to expire on Jan. 17, unless extended.

Taubman’s latest mall extravaganza is the Millenia, in Orlando, which opened two months ago. Taubman said that its Stony Point mall in Richmond, Va., is set to open in September 2003. The firm’s mall portfolio is considered high end, featuring tony upscale names such as Neiman Marcus, Cartier, Tiffany and properties of LVMH Moët Hennessy Louis Vuitton.

James Sullivan, an analyst who covers Simon at Prudential Securities, issued a research note in which he concluded: “We believe that Taubman should continue to rebuff Simon’s attempt to acquire the company. The company has only received an offer from one prospective buyer to buy the company and has rejected it as inadequate. So we guess that Simon is likely to have an uphill battle in attempting to complete the hostile bid.”