MALL DEVELOPERS DEBARTOLO, SIMON AGREE TO MERGE
NEW YORK — Two of the nation’s largest regional mall developers and managers — Simon Property Group and DeBartolo Realty Corp. — have agreed to merge in an exchange of stock.
Under the agreement, each DeBartolo share will be exchanged for 0.68 of a share of Simon stock. At the current price of Simon stock, the offer is worth about $16 per DeBartolo share, or a total of $1.4 billion.
Calling it the largest real estate merger in history, the companies noted that the new entity, Simon DeBartolo Group, will manage 126 million square feet of space, more than twice that of the next-largest retail real estate company. The space represents annual retail sales of $16 billion.
The merged company will be based at Simon’s Indianapolis headquarters and maintain a presence in Youngstown, Ohio, DeBartolo’s headquarters. Simon stock closed Tuesday at 23 5/8, down 3/8 and DeBartolo rose 7/8 to 15 1/2 on the New York Stock Exchange.
In 1995, Simon had revenues of $553.7 million and employed 4,100 people. DeBartolo’s revenues were $332.7 million and it employed 3,900. Based on 1995 results, the combined company would have earned $600 million before interest, taxes, depreciation and amortization.
Melvin Simon and Herbert Simon will remain co-chairmen of the merged company and David Simon will continue as chief executive officer. Richard S. Sokolov, president and chief executive officer of DeBartolo, will become president and chief operating officer.
In addition, Edward J. DeBartolo Jr., Denise DeBartolo York and Sokolov will join the expanded board of the merged company.
The deal has been approved by the boards of both firms, but needs a definitive agreement, approval of shareholders of both companies and regulatory approvals. The transaction is expected to be completed this summer.
Sokolov called the two companies “an ideal match,” well suited geographically with DeBartolo’s strong presence in Florida, Simon’s strength in the Southwest and the “complementary positions” in the Midwest and Northeast.