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Shopping Centers Today -> November 2003
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SHARES UP AFTER TAUBMAN FIGHT
BY IAN RITTER
Days after Simon Property Group and Westfield America Trust withdrew their $1.7 billion ($20 per share) unsolicited bid to buy Taubman Centers, the stock prices of both Simon and Taubman were still trading near their 52-week highs.
Simon’s stock closed at $45.67 the day after the withdrawal, up 0.86 percent from the previous day, and Taubman’s stock closed at $20.40, up 2.51 percent. When the bid was launched in November, Taubman shares traded at $14.80. Westfield, an Australian company, also saw its stock hold steady.
This vindicates Taubman’s argument that Simon’s tender offer was too low, said a Wall Street analyst, who requested anonymity, citing Taubman’s estimates that its mall portfolio would fetch a 6 percent cap rate. “If you use that to value the portfolio, then the worth of the stock was considerably more than $20,” the analyst said.
Simon and Westfield’s decision came days after Michigan passed a law that enabled Taubman to block the takeover. The new law allows company shareholders to organize into groups to block a takeover. That overruled a federal judge’s verdict in May holding that Robert S. Taubman, chairman and CEO of Taubman Centers, had violated state law by organizing just such a group.
This end to the struggle has helped buoy the companies’ stock prices, says Arthur Oduma, a real estate analyst for research firm Morningstar.
“This puts a stop to it, and that is a good thing,” Oduma said. He points out that the bid was a costly distraction for Simon, which, he says, paid about $9 million in legal fees.
Simon and Westfield’s decision to drop their unsolicited bid for Taubman ended an 11-month drama that had gripped the industry.
“The new legislation allows the Taubman family group to effectively block [Simon’s] and Westfield’s ability to conclude their all-cash offer for [Taubman] common stock,” acknowledged a Simon and Westfield press release issued the day after the bill was signed.
“We’re pleased” with Simon and Westfield’s decision, Taubman wrote in a statement.
Simon and Westfield were left with one alternative after the law was enacted: a drawn-out proxy fight for control of the Taubman board. But REIT analysts at Morgan Stanley predicted that the suitors would abandon their effort, noting that such a proxy fight would be too long and expensive.
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