Simon offers General Growth $10 billion buyout (11:43 a.m. 2/16/10)

Indianapolis (AP) — The nation’s largest shopping mall owner, Simon Property Group, made a $10 billion hostile bid Tuesday to acquire its ailing rival, General Growth Properties.

The deal would allow General Growth, the No. 2 owner of shopping centers, to emerge from Chapter 11 bankruptcy protection. General Growth filed for bankruptcy protection last year after buckling under the weight of billions in debt it racked up during a massive expansion effort fueled by cheap credit.

General Growth’s best known centers include the Glendale Galleria in Southern California and the South Street Seaport in Manhattan. In Wisconsin, General Growth owns Fox River Mall in Appleton, Oakwood Mall in Eau Claire and Mayfair Mall in Wauwatosa.

The offer would fully repay $7 billion to General Growth’s unsecured creditors and $3 billion to shareholders. Stockholders would get $6 a share in cash and $3 a share in other assets. The offer, however, might be amended so shareholders could receive Simon stock instead of cash.

Simon made the public offer after General Growth executives failed to make a “substantive response” Simon’s overtures.

“Simon’s offer provides the best possible outcome for all General Growth stakeholders,” according to a statement attributed to David Simon, chairman and CEO.

Though the official committee for General Growth’s unsecured creditors has backed the deal, stockholders appeared to be looking for a sweeter offer from Simon or one of its competitors.

A spokesman for Chicago-based General Growth had no immediate comment.

Simon, unlike many of its competitors, has been able to weather the economic downturn thanks in part to its higher rents. The Indianapolis-based company popularized the so-called lifestyle center mall design that turned malls into veritable neighborhoodlike communities. The company owns more than 380 properties, including the Houston Galleria and the Fashion Valley Mall in San Diego.

In Wisconsin, Simon’s properties include Forest Mall in Fond du Lac, Johnson Creek Premium Outlets in Johnson Creek, Bay Park Square in Green Bay and Southridge Mall in Greendale.