Simon Property Group is trying to back out of its proposed acquisition of Taubman Centers after the coronavirus pandemic decimated its business.- Taubman Centers, a REIT operator of shopping outlets, saw its shares crater as much as 41% Wednesday morning on the news.
- Simon Property Group announced its planned acquisition of Taubman on February 10, just one week before the coronavirus pandemic sent the market in a tailspin.
- Simon says Taubman breached its obligations related to the operation of its business.
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Taubman Centers cratered as much as 41% on Wednesday after Simon Property Group announced its plan to terminate its proposed acquisition of the shopping outlet REIT.
Simon Property Group announced its proposed $3.6 billion acquisition of Taubman Centers on February 10, which sent Taubman shares soaring 54% on the news.
But the proposed acquisition was bad timing on Simon's part, as it was just one week before the coronavirus pandemic sent the market into a tailspin, with the S&P 500 index eventually falling nearly 35%.
Simon says Taubman breached its contract on two grounds:
First, that the coronavirus pandemic "had a uniquely material and disproportionate effect on Taubman" relative to other retail
Simon filed an action in court against Taubman, "requesting a declaration that Taubman has suffered a material adverse event." Simon argued that the initial merger agreement with Taubman gave it the right to terminate the transaction "in the event that a pandemic disproportionately hurt Taubman."
Taubman traded down as much as 41% to $26.70, and Simon Property Group fell as much as 10% to $78 in Wednesday trades.