LOS ANGELES – Simon Property Group Inc., the nation’s largest shopping mall owner, made a $10 billion hostile bid Tuesday to acquire ailing rival General Growth Properties.
The acquisition would allow General Growth, the No. 2 owner of shopping centers, to emerge from Chapter 11 bankruptcy protection. General Growth filed for bankruptcy last year after buckling under the weight of billions in debt it racked up during a massive expansion effort fueled by cheap credit.
General Growth owns three Inland Northwest properties: NorthTown Mall, Spokane Valley Mall and Silver Lake Mall in Coeur d’Alene.
The move is Simon’s second attempt at a major acquisition in three months. In December, Simon offered $700 million in cash and stock to buy more than 60 outlet shopping centers from another competitor, Prime Outlets Acquisition Co. The deal is pending.
Simon is using its comfortable cash cushion and credit lines to take advantage of falling commercial property values, which are off 40 percent from their peak in 2007. And General Growth has some prized centers, including the Glendale Galleria in Southern California and the South Street Seaport in Manhattan.
Simon has been able to weather the economic downturn despite rising retail vacancy rates in the double-digits in some cities. The Indianapolis-based company popularized the so-called lifestyle center mall design that turned malls into neighborhood-like communities. Simon owns more than 380 properties, including the Houston Galleria and the Fashion Valley Mall in San Diego.
Under the terms of the offer, General Growth’s unsecured creditors would get $7 billion, which would pay them in full. Shareholders would receive $3 billion, or $6 a share in cash and $3 a share in other assets. The offer, however, might be amended so shareholders could receive Simon stock instead of cash.
A spokesman for Chicago-based General Growth had no immediate comment.