Simon Property Group Inc., the biggest U.S. mall operator, on Monday agreed to buy rival Taubman Centers Inc. in a deal valued at $3.6 billion.
Simon said it would buy an 80% stake in Taubman Realty Group Limited Partnership, the entity through which Taubman Centers conducts its business.
The Taubman family will sell about a third of its interest in TRG and remain a 20% partner in the firm, the companies said.
Simon could drive improved cash flows at Taubman due to its “long demonstrated ability to increase net operating income above the normal operations of a mall,” said Piper Sandler analyst Alexander Goldfarb.
The acquisition comes against the backdrop of falling U.S. mall traffic as customers switch to online shopping, and it could help Simon boost its ability to negotiate leases with retailers.
Taubman owns or leases 26 regional shopping centers in the United States and Asia, while Simon has stakes in more than 220 malls and other retail properties in the United States and international markets.
Simon’s holdings include St. Louis Premium Outlets in Chesterfield. Taubman also opened an outlet mall in Chesterfield, but it sold the building and operations to The Staenberg Group in May 2019.
The deal is expected to close by the middle of 2020.
Taubman shares rose by $18.45 or more than 53% to close at $53.12 on the day.
Editor’s note: Taubman sold the buildings and operations of its Chesterfield outlet mall to The Staenberg Group in 2018; TSG is leasing the land from Taubman. An earlier version of this story was incorrect.
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