Simon Nabs Mills
Mar 1, 2007 12:00 PM, Elaine Misonzhnik
After struggling for a year to find a buyer, Mills Corp. accepted two buyout offers in less than four weeks. The Chevy Chase, Md.-based company's board reached a deal to be acquired by Simon Property Group's and Farallon Capital Management's $25.25 per share offer — including $1.63 billion in cash and worth a total of $7.9 billion when debt and other considerations are factored in.
Canadian office REIT Brookfield Asset Management passed on its option to up its offer and pocketed a cool $40 million as a breakup fee, plus reimbursement for expenses.
The Mills saga has been marked with twists and turns the whole way, so it's possible that an agreement with Simon and Farallon would not be the end of the story. Akash Dave, who follows both Brookfield and Mills for Morningstar, says that a new bid is possible and does not rule out additional bids from other mall operators.
The deal, if it closes, would change Simon's debt to gross asset value ratio from 35 percent to 40 percent, according to Bank of America analyst Ross Nussbaum. Simon currently has a debt load of $15.39 billion. Mills, with a debt to asset value ratio of almost 85 percent, is more than $5.1 billion in debt. Mills is also facing several shareholder lawsuits related to its restatement of financial reports from 2000 to 2005, including one by the company's founder and former CEO Herbert S. Miller.
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