By and  on February 19, 2010

Bankrupt mall operator General Growth Properties Inc. said Thursday that it declined Simon Property Group Inc.’s $10 billion offer to purchase the firm.

GGP chief executive officer Adam Metz said in a letter to David Simon, his counterpart at Simon, that “your objectives are not aligned with ours,” but added he hoped Simon would participate in the restructuring process getting under way.

“As we have previously stated, our objective is to maximize value for the company and its stakeholders, and we are engaging in a process that is intended to accomplish that result in an expeditious manner,” Metz wrote.

The move came a day after Simon urged serious talks between his firm, the nation’s largest mall operator, and its next biggest competitor.

Simon declined to comment on GGP’s response.

Simon, which made its unsolicited offer on Tuesday, said in its letter on Wednesday that the $10 billion offer is “firm” and “fully financed” and offers an immediate full cash recovery to unsecured creditors, plus “more than $9 per share in value to shareholders.” Simon has said General Growth’s unsecured creditors committee, representing parties owed about $7 billion, supports the offer.

Simon also emphasized in its note that the firm’s offer is “not open-ended,” discouraging the hope Simon might return with a more lucrative offer.

“They are just having a war of words. Things are heating up,” said RBC Capital Markets real estate analyst Rich Moore, who said speculation has continued about Simon teaming up with private equity firm Blackstone Group LP to buy GGP.

Brookfield Asset Management, a Canadian real estate firm that holds $1 billion of GGP’s unsecured debt, is said to be interested in refinancing the company, and remains a major player in this story, Moore said.

Sydney-based Westfield Group has also been cited as an interested party.

“It’s like throwing a steak into a pit of wolves,” Moore said of the “vulnerable” GGP, but “this is all in the hands of the bankruptcy judge.”

Chicago-based GGP, which in April filed the biggest real estate bankruptcy in U.S. history with a $27 billion debt load, asked the judge to extend its Feb. 26 deadline to submit a reorganization plan to Aug. 26. If the extension is not granted, creditors would be able to submit competing plans after the current deadline expires.

Simon’s bid for GGP is for less money than GGP paid for Rouse Co. in 2004, when it dished out $12.6 billion, including the assumption of $5.4 billion of debt, to buy a smaller competitor with prestige properties.

On Thursday, Simon’s shares closed at $77.22, up $1.37, or 1.8 percent, while GGP’s finished trading at $12.69, down 23 cents, or 1.8 percent.

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