Simon Property Group Terminates Merger Agreement with Taubman Centers, Inc.

Strategic Insights -

Simon Property Group, Inc. ("Simon") has terminated its February 9, 2020 merger agreement with Taubman Centers, Inc. ("Taubman") due to the occurrence of a material adverse effect in respect of Taubman and breaches of multiple provisions of the merger agreement. The termination is based on two separate and independent grounds: the COVID-19 pandemic has had a uniquely material and disproportionate effect on Taubman, and Taubman has breached its obligations related to the operation of its business. Simon has filed a complaint in the Circuit Court for the 6th Judicial Circuit of Oakland County, Michigan, requesting a declaration that Taubman has suffered a Material Adverse Event ("MAE") and has breached the covenants in the merger agreement.

Key Takeaways:

  • Simon Property Group, Inc. has terminated its merger agreement with Taubman Centers, Inc. due to a material adverse effect in respect of Taubman.
  • The termination is based on two separate and independent grounds: the COVID-19 pandemic's impact on Taubman and Taubman's breaches of its operational obligations.
  • Simon has filed a complaint in the Circuit Court for the 6th Judicial Circuit of Oakland County, Michigan, requesting a declaration that Taubman has suffered a Material Adverse Event ("MAE") and has breached the covenants in the merger agreement.
  • Simon Property Group has a market capitalization of approximately $29.6 billion and is a real estate investment trust engaged in the ownership of premier shopping, dining, entertainment, and mixed-use destinations.
  • The merger agreement was valued at approximately $3.6 billion and contemplated that Simon would acquire all Taubman common stock and an effective 80% interest in Taubman Realty Group, Limited Partnership.

Statistics:

  • Simon Property Group's closing stock price on June 10, 2020, was $37.41.
  • The COVID-19 pandemic has disproportionately affected Taubman Centers, Inc., with its enclosed retail properties located in densely populated major metropolitan areas and dependence on both domestic and international tourism at many of its properties.
  • Taubman Centers, Inc. has a market capitalization of approximately $2.3 billion.
  • The merger agreement was signed on February 9, 2020, and the termination was announced on June 11, 2020.

Sources:

  • Form 8-K filing submitted by Simon Property Group, Inc. to the Securities and Exchange Commission on June 11, 2020.
  • Press release issued by Simon Property Group, Inc. on June 10, 2020.
  • SmarTrend Alert from Comtex SmarTrend, an automated pattern recognition system, indicating an UPTREND on SPG stock on June 7, 2012.