The Wall Street Journal reports Simon Property Group, the largest retail REIT in the U.S., and Farallon Capital Management, a $26 billion hedge fund, have bid $1.56b for Mills Corp, topping the $1.35b offer Mills had already reached agreement with Canada-based Brookfield Asset Management. The significance of the bid includes the growing presence of hedge funds in takeover bidding and their collaboration with corporations in deals. Also, there seems to be no hesitation to breakup agreed-upon deals. The Simon Property-Farallon Capital bid represents $24/share in cash, or $3 higher than Brookfield's offer. Simon and Farallon will reportedly make a tender offer, which will result in a quicker payment to shareholders, at least six months ahead of Brookfield's. Mills also has more than $6b in debt and preferred stock that will have to be assumed. Separately, there's an ongoing bidding war over Equity Office Properties Trust which could settle this week in a deal valued in excess of $40b.
Sources: NY Times, Wall Street Journal
Commentary: The Mills Saga Is Not Over • Brookfield Announces Intent To Buy Mills Corp. - Gazit Globe Reacts With Higher Bid • Mills Corp: Farallon Capital Seeks Additional Shares • Mills Corporation - How Badly is it Doing?
Stocks/ETFs to watch: Simon Property Group (SPG), Mills Corp (MLS), Brookfield Asset Management (BAM). Competitors: Developers Diversified Realty (DDR), General Growth Properties (GGP). ETFs: iShares Cohen & Steers Realty Majors (ICF), iShares Dow Jones US Real Estate (IYR), DJ Wilshire REIT (RWR), Vanguard REIT Index (VNQ)
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