On March 3, the bankruptcy court granted General Growth Properties a four-month extension to exclusivity, preventing suitors such as Simon Property Group from submitting bids directly to the court. After the four additional months, General Growth could apply for a second extension. We believe General Growth will use this time to pursue alternative avenues of maximizing value for its shareholders, as General Growth believes that Simon’s initial bid offered too little for equity holders, though it would pay off unsecured creditors in full in cash.
Simon’s initial offer to common shareholders comes to about $9 per share ($6 in cash and $3 in stock of General Growth’s non-mall properties), relative to General Growth’s $13.49 price at the March 3 market close. In contrast, Brookfield Asset Management, with the support of General Growth’s management, has offered $15 per share for a large minority stake in General Growth. In response to the bankruptcy court’s extension, Simon said it would begin its due diligence of General Growth. Other commercial real estate companies, including Vornado and Westfield Group (Australia), are reportedly looking over General Growth’s finances as well, perhaps with the intention of bidding on all or parts of the firm.