Simon Property Group Inc., which for months was involved in a campaign to acquire General Growth which is in Chapter 11 bankruptcy y, recently withdrew its bid due to a bankruptcy court decision that would make the acquisition too expensive.
The plan approved by U.S. Bankruptcy Court Judge Allan Gropper in New York would enable General Growth to emerge from Chapter 11 bankruptcy protection as a standalone company. Under the plan, General Growth would receive $6.5 billion from an investor group led by Canadian property manager Brookfield Asset Management Inc.
But the deal also included a provision that would give the Brookfield consortium stock warrants worth potentially more than $500 million if General Growth went with another bidder.
Simon Property, which is the largest shopping mall owner in the country, had outbid another company for the acquisition of General Growth, which is in Chapter 11 bankruptcy; but had hoped that they could take over their competitor; but now say that the $500 million payment to the investor group would make the deal unprofitable.
CEO Adam Metz said late Friday the Brookfield-led plan serves as an "insurance policy" for General Growth because it gives the company the funds it needs to exit bankruptcy while at the same time allowing it to pursue other potential offers.
However, although that the Simon Property bid has been withdrawn, General Growth says that it will continue to consider other bids between now and July. Once July arrives the company will decide on which deal will provide them the best opportunity to successfully exit Chapter 11 bankruptcy and to thrive after their bankruptcy exit.