Kristena Hansen / 91.5 KJZZ – Rumors of a possible takeover attempt of California-based Macerich Co. – which owns the largest number of shopping malls in Arizona – were thrust into the public spotlight this week.
Indianapolis-based Simon Property Group revealed in November it had acquired a 3.6 percent stake in rival Macerich.
That ignited rumors Simon was seeking a takeover, a move that would create the largest shopping mall owner in the U.S. by far.
This week, Simon opted to make its pursuit a matter of public knowledge.
David Simon, Simon’s chairman and CEO, said in a statement this week his company had tried several times to engage Macerich in private talks about a $22.4 billion-buyout, but its rival has so far “refused.”
“We urge Macerich to forego entrenching defensive tactics that obstruct the will of its shareholders and instead engage in serious discussions with us,” Simon said. “It is our strong preference to work with Macerich to reach a mutually beneficial agreement and we are available immediately to meet with Macerich and its advisors.”
Local retail analyst Jeff Green, who is president and CEO of Phoenix-based Jeff Green Partners, said he isn’t surprised by Simon’s unsolicited pursuit.
“It’s a difficult time in the retail industry,” Green said. “Macerich has had a long run. It may just be the right time. There’s always been cycles, but there’s never been strong Internet shopping like there is now. So it’s like a new normal.”
The back and forth occurring between Macerich and Simon is typical in hostile takeover situations and things could escalate.
It’s a similar situation that Phoenix-based PetSmart Inc. wound up in last summer. The company initially resisted urging by Jana Partners, an activist investor and previously one of PetSmart’s largest shareholders, to sell itself. But PetSmart eventually gave in and was taken private after the $8.7 billion-buyout deal closed this week.
Green said Macerich will likely do the same.
Simon and Macerich are the first and third-largest, respectively, shopping mall owners in the country. Both are also publicly traded real estate investment trusts, or REITs.
Macerich’s portfolio of 59 shopping malls is mostly concentrated on the West Coast. In Arizona, it owns 15 malls including high-end assets such as Scottsdale Fashion Square, Kierland Commons and Biltmore Fashion Park. It has maintained the largest shopping mall footprint in the state since acquiring Phoenix-based mall developer Westcor Realty L.P. in 2002.
Simon owns only one mall in Arizona, Tempe’s Arizona Mills, so a marriage with Macerich would boost its West Coast presence, add more high-end properties to its portfolio and provide growth opportunities at a time when brick-and-mortar retail is struggling in the new age of online shopping.
