8-KLeadership ChangesAcquisitions & DispositionsCorporate Changes+2

SIMON PROPERTY GROUP INC. 8-K Report, Acquisition Completed (Oct 20, 2004)

Filed October 20, 2004For Securities:SPGSPG-PJ

Summary

Simon Property Group, Inc. (SPG) has officially completed its acquisition of Chelsea Property Group, Inc. (Chelsea) on October 14, 2004. This significant transaction, valued at approximately $3.5 billion, involved the acquisition of Chelsea's common stock and operating partnership units. The deal also included the assumption of Chelsea's existing debt and preferred stock, totaling around $1.3 billion as of June 30, 2004, thus increasing SPG's overall leverage. The consideration paid to Chelsea shareholders included a mix of cash, SPG common stock, and newly issued convertible preferred stock (Series I). This strategic acquisition is expected to expand Simon's portfolio and market presence. In connection with the merger, David C. Bloom, former CEO of Chelsea, has been appointed as a non-voting Advisory Director to the Simon Board. This 8-K filing details the completion of the merger and the associated issuance of new preferred stock series.

Key Highlights

  • 1Completion of the acquisition of Chelsea Property Group, Inc. (Chelsea) by Simon Property Group, Inc. (SPG) on October 14, 2004.
  • 2The total transaction value is approximately $3.5 billion, plus the assumption of $1.3 billion in Chelsea's existing debt and preferred stock.
  • 3Consideration for Chelsea's common stock included cash ($36.00), SPG common stock (valued at $16.61), and 6% Series I Convertible Perpetual Preferred Stock (valued at $15.00).
  • 4Chelsea's operating partnership units were exchanged for SPG's operating partnership units and Series I Convertible Perpetual Preferred Units.
  • 5Chelsea's preferred stock was converted into SPG's 8 3/8% Series J Cumulative Redeemable Preferred Stock.
  • 6David C. Bloom, former CEO of Chelsea, appointed as a non-voting Advisory Director to the SPG Board.
  • 7SPG filed Certificates of Designation for the newly issued Series I Convertible Perpetual Preferred Stock and Series J Cumulative Redeemable Preferred Stock.

Frequently Asked Questions

The primary purpose of this 8-K filing is to officially report the completion of Simon Property Group's (SPG) acquisition of Chelsea Property Group, Inc. (Chelsea) on October 14, 2004. It details the transaction value, consideration paid, and the impact on SPG's capital structure, including the issuance of new preferred stock and the assumption of debt.

The acquisition was funded through a combination of cash payments, the issuance of Simon Property Group (SPG) common stock, and the issuance of newly created SPG 6% Series I Convertible Perpetual Preferred Stock. Additionally, SPG assumed approximately $1.3 billion of Chelsea's existing indebtedness and preferred stock.

The Series I Convertible Perpetual Preferred Stock was issued as part of the consideration to Chelsea's common shareholders, offering a 6.0% yield and convertibility into SPG common stock. The Series J Cumulative Redeemable Preferred Stock was issued to replace Chelsea's existing Series A Preferred Stock, maintaining the 8 3/8% dividend rate. Both are designated securities outlining their specific terms and rights.

As part of the transaction, David C. Bloom, the former Chief Executive Officer of Chelsea, has been appointed as a non-voting Advisory Director to the Simon Property Group Board of Directors, effective October 14, 2004. He will not serve on any board committees.