Washington – Mall developer Mills Corp. said Tuesday it now favors a $1.6 billion offer from Simon Property Group Inc. and hedge fund Farallon Capital Management LLC – a deal that tops an earlier takeover agreement Mills made with Brookfield Asset Management Inc.
Chevy Chase, Md.-based Mills said its board of directors concluded that the Simon-Farallon deal, at $24 per share, is “superior” to Brookfield’s proposed $21-per-share offer, valued at $1.35 billion. The board authorized Mills to end the Brookfield deal.
Mills, owner of Colorado Mills in Lakewood, said in a statement it will give Toronto-based Brookfield three days to top its offer. The company said it “is ready and willing to negotiate such an amendment” with Brookfield.
Brookfield spokeswoman Katherine Vyse declined to comment Tuesday. In a conference call Friday to discuss the company’s fourth quarter, chief executive Bruce Flatt said Brookfield would “consider our options” if Mills preferred Simon-Farallon.
Along with the higher price, Mills said its board preferred the Simon-Farallon deal because it could be closed more quickly than the Brookfield proposal. Ending the Brookfield agreement would likely result in Mills absorbing a $40 million breakup fee, which some Wall Street analysts said was not a considerable amount.
Mills, which owns 38 shopping centers and was one of the first megamall developers, has struggled in the past year, saddled with accounting problems and heavy debt.
The Securities and Exchange Commission is investigating Mills’ accounting missteps, which the company said are widespread and could trim up to $352 million from shareholder equity. Mills has yet to file its 2005 annual report and plans to restate earnings as far back as 2001.
