NEW YORK — Simon Property Group Tuesday exercised its option to buy Sheldon Gordon’s stake in the Forum Shops at Caesars in Las Vegas for $174 million, thereby blocking arch rival Taubman Centers from getting involved in the premium shopping site.
Yet, Taubman benefits indirectly from Simon’s move anyway. Upon the transaction’s closing, Gordon will invest, on an aftertax basis, $50 million of the cash proceeds from the Forum deal in Taubman in exchange for 2.08 million Taubman operating partnership units at $24 a unit.
As reported, had Simon, principal owner of Forum, elected to sell its stake to Gordon, Taubman would have had the opportunity to manage Forum Shops and, in partnership with Gordon, expand and develop the property.
Under the terms of the existing partnership agreement, the closing of the Forum Shops transaction is to occur within 120 days of Simon’s decision. Gordon’s investment in the company is expected to close soon thereafter.
Considered a pioneer in narrowing the gap between shopping and entertainment, privately held Gordon Group Holdings created The Forum Shops and also developed San Francisco Center, Bridgemarket in New York City, Pearlridge and Kahala Mall in Honolulu, and the current redevelopment of the Ocean One Pier in Atlantic City, N.J.
Taubman and Simon have been locked in energetic combat all year, highlighted by Simon’s hostile takeover bid for Taubman. The two realty titans face another deadline at the end of this week. Simon is waiting to find out if enough Taubman shareholders will tender their shares to allow it to take over its competitor. The deadline for the takeover offer, as reported, is Feb. 14.