The $3.6 billion mall merger was nearly two decades in the making when the two real estate players finally inked the deal in February, but the coronavirus shutdown has Simon seeing the world in a new light.
Simon exercised its right this month to terminate the deal on the grounds that luxury-laden Taubman had been hit especially hard in the COVID-19 shutdown and asked a state court in Michigan to confirm the move.
Taubman argued the transaction was still valid and the case is now working its way through the legal system. Circuit Court Judge James Alexander ordered the two sides to begin discovery and also to complete “facilitative mediation” by July 31. The case is expected to be trial-ready by mid-November.
Of the votes cast at the Taubman shareholder meeting, 99.7 percent were in favor of the merger, constituting 84.7 percent of the shares entitled to vote.
“Taubman stands ready, willing and able to close the transactions with Simon on June 30, the third business day following the satisfaction of all conditions precedent, which is the timeline required by the merger agreement,” the company said.
With a kind of corporate sigh and a little legalese, Taubman noted, “It appears that Simon will not consummate the transactions on June 30, despite Simon’s contractual obligation to do so.”
It’s not wholly surprising that the merger is on the rocks. Sycamore Partners sued to get out of its deal to buy Victoria’s Secret, prompting the retailer’s parent company L Brands Inc. to walk away. Even LVMH Moët Hennessy Louis Vuitton’s $16.2 billion deal to buy Tiffany & Co. has gone wobbly.
Clearly the market dynamic has changed and all the more so for anyone with enclosed malls.
Simon also seems to be growing keener — whether out of necessity or not — on a different kind of deal.
Having teamed with General Growth Partners to buy Aéropostale in 2016, Simon is now said to be part of a group looking to buy the bankrupt J.C. Penney Co. Inc., a deal that could help it potentially avoid some sudden vacancies in anchor spots.