The Simon Property Group shopping center operator agreed to buy rival Taubman Centers Inc. for approximately $ 3.6 billion, in a transaction that occurs while the retail industry faces the growth of e-commerce.
The effect of this sale in Puerto Rico is still unknown, where Simon operates the Plaza Carolina and Puerto Rico Premium Outlets in Barceloneta, and Taubman does the same with The Mall of San Juan. Attempts to get management reactions from the aforementioned shopping centers on the island proved unsuccessful.
Simon announced today that he will acquire an 80% stake in The Taubman Realty Group Limited Partnership. It will also buy all of Taubman’s common shares for $ 52.50 per share in cash. The Taubman family will sell approximately one third of its stake at the transaction price and the company that bears his last name will remain as a 20% partner.
In a joint statement, it was reported that Taubman is dedicated to owning, managing or leasing 26 super-regional shopping centers in the United States and Asia. The company’s properties include 24 high-quality retail assets (including 21 in the United States and three in Asia), which consist of some 25 million square feet of raw space for rent, and will continue to be managed by its existing executive team , under the leadership of its president and chief executive officer Robert S. Taubman, in association with Simon.
Simon and Taubman had intermittent discussions about an agreement since late last year, the Bloomberg news agency reported. The agreement comes at the time that the e-commerce boom has more American consumers buying from home, which makes it difficult for the retailers to survive with physical presence and impacts the shopping centers.
Although Taubman and Simon have fared better than some competitors, the actions of both companies have plummeted in the last 12 months. Still, Simon was looking for a way to expand his operations and was attracted to Taubman’s property portfolio, according to Lindsay Dutch, an analyst at Bloomberg Intelligence.
“There are not many opportunities to grow in retail”said Dutch. He added that Simon needs to focus on his shopping centers in the United States, which have been affected by the closure of stores, and the deal may leave room for that, according to Dutch.
The agreement would mark the end of family control of Taubman, one of the pioneer companies of the shopping center industry in the United States.
Simon has a portfolio of over 100 properties in the United States, Canada, Asia and Europe.
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