Simon terminates $3.6 billion Taubman takeover; files suit against company

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Simon terminates $3.6 billion Taubman takeover; files suit against company

By Marianne Wilson - 06/10/2020

The nation’s largest mall operator has called off its merger agreement with — and filed suit against — a rival, citing fallout from the COVID-19 pandemic.

Simon Property Group announced it has exercised its “contractual rights to terminate” its February 9, 2020 merger agreement with Taubman Centers Inc. and has filed suit against Taubman. In the suit, Simon alleges that the COVID-19 pandemic had a “uniquely material and disproportionate effect on Taubman” compared to other retail real estate participants. It also alleges that Taubman breached its obligations related to the operation of its business.

“In particular, Taubman has failed to take steps to mitigate the impact of the pandemic as others in the industry have, including by not making essential cuts in operating expenses and capital expenditures,” Simon stated. 

Simon said that the merger agreement specifically gave it the right to terminate the transaction in the event that a pandemic disproportionately hurt Taubman. (Taubman owns, manages or leases  26 premium shopping malls in the U.S. and Asia, including The Mall at Short Hills in Short Hills, N.J., and Beverly Center in Los Angeles.) 

“Taubman's significant proportion of enclosed retail properties located in densely populated major metropolitan areas, dependence on both domestic and international tourism at many of its properties, and its focus on high-end shopping have combined to impact Taubman's business disproportionately due to the COVID-19 pandemic when compared to the rest of the retail real estate industry,” Simon stated. “In addition, Taubman has breached its obligation to operate its business in the ordinary course.”