Mills Corp. said it will begin talks with Simon Property Group Inc. and Farallon Capital Management LLC to consider their $1.56 billion bid for the company.
The group has offered $24 a share, outbidding the $21-a-share bid by Brookfield Asset Management Inc., which agreed on Jan. 17 to buy Chevy Chase, Md.-based Mills.
Mills, owner of 38 U.S. regional malls, including Colorado Mills in Lakewood, has lost 35 percent of its market value in the past 12 months amid a Securities and Exchange Commission investigation into its accounting. It has sold properties to pay debts and ran out of money before it could complete its biggest project ever, the 104-acre Meadowlands Xanadu shopping and entertainment complex in New Jersey. Mills has sold its Xanadu stake.
“Simon’s offer is incredibly credible,” said Rich Moore, a real estate analyst with RBC Capital Markets in Columbus, Ohio. “Farallon’s involvement is a signal to the market that Mills’ top shareholder is on board with the bid.”
Mills directors haven’t made a decision on the offer from Indianapolis-based Simon, the largest U.S. mall developer, and Farallon, a San Francisco-based hedge fund that is Mills’ largest shareholder, Mills said in a statement.
Toronto-based Brookfield declined to comment, said spokeswoman Katherine Vyse.
Mills shares rose 48 cents to $26.35 at 4 p.m. in New York Stock Exchange composite trading. The shares have risen 17 percent since Brookfield’s Jan. 17 bid.
Simon and Farallon will each contribute $650 million in equity to finance the offer.
Mills’ holdings include the Galleria at White Plains, N.Y.; Del Amo Fashion Center in Los Angeles; The Shops at Riverside, Hackensack, N.J.; Arundel Mills near Baltimore; Westland Mall, Miami; and Sawgrass Mills, Fort Lauderdale, Fla.
