8-KMaterial AgreementsRegulation FDExhibits & Filings

SIMON PROPERTY GROUP INC. 8-K Report, Material Agreement (Nov 16, 2020)

Filed November 16, 2020For Securities:SPGSPG-PJ

Summary

Simon Property Group, Inc. (SPG) has filed an 8-K detailing an Amended and Restated Merger Agreement with Taubman Centers, Inc. (TCO). This filing confirms an updated agreement to proceed with the acquisition of TCO, a move that was previously in dispute and subject to litigation. Key changes in the amended agreement include the removal of the material adverse effect (MAE) condition for TCO and modifications to how certain representations and warranties are evaluated, which are favorable to Simon. The transaction structure outlines that TCO common stock will be acquired for $43.00 in cash per share, while TCO partnership units will be converted into either Simon Operating Partnership units or cash, with options for minority partners. The deal also establishes a joint venture for TCO's assets, with Simon holding an 80% stake and the Taubman family holding 20%, which includes provisions for management, distributions, and future buyouts. This amended agreement aims to resolve the prior merger litigation and provides a clearer path to closing, although shareholder approval for TCO is still a necessary condition. Investors should note the $43.00 per share cash consideration for TCO common stock, the formation of a joint venture with specific management and distribution terms, and the termination provisions, including a $92 million termination fee payable by Taubman under certain circumstances. The resolution of the litigation and the updated merger terms provide greater certainty for the transaction's completion, which is expected to be a significant strategic move for Simon in consolidating its position in the retail real estate market.

Key Highlights

  • 1Simon Property Group (SPG) has executed an Amended and Restated Merger Agreement with Taubman Centers, Inc. (TCO), moving forward with the acquisition.
  • 2The cash consideration for TCO common stock is set at $43.00 per share.
  • 3The amended agreement removes the 'material adverse effect' (MAE) condition for TCO, simplifying closing requirements.
  • 4A joint venture will be formed for TCO's assets, with SPG holding 80% and the Taubman family holding 20%.
  • 5The prior merger litigation between SPG and TCO has been settled and dismissed.
  • 6TCO's minority partners have options to receive either cash or Simon Operating Partnership units for their TCO partnership interests.
  • 7A termination fee of $92 million is payable by Taubman to Simon under specific circumstances.

Frequently Asked Questions

The filing states that each share of TCO common stock will be converted into the right to receive $43.00 in cash. For an exact total value, one would need to refer to TCO's outstanding common shares at the time of the agreement, which is not detailed in this 8-K filing but would be found in TCO's public filings or press releases associated with the deal.

The most significant changes include the removal of the condition requiring the absence of a material adverse effect (MAE) with respect to TCO, and modifications to how certain representations and warranties are determined, excluding those known to Simon or resulting from exogenous events. Additionally, the agreement addresses the previous litigation between the two companies.

Following the merger and conversion, the Taubman family will own 20% of a joint venture holding TCO's assets, with Simon's subsidiary owning the remaining 80%. The Taubman family will have involvement in the management of the joint venture, particularly during an initial 'Taubman Period,' and will have certain rights to exchange their equity for Simon Operating Partnership units or cash over several years.

The Settlement Agreement, executed concurrently with the Amended Merger Agreement, resolves and dismisses the merger litigation that Simon had initiated against Taubman. This agreement, along with the amended merger terms, clears a significant hurdle for the completion of the transaction.