The bidding war over local mall developer Mills Corp. appears to have come to an end.
The Chevy Chase-based company signed a definitive merger agreement to be acquired by Simon Property Group, Inc. and Farallon Capital Management LLC, which is Mills’ largest shareholder, for $1.64 billion, the companies said yesterday.
Brookfield Asset Management Inc., the Toronto company that had signed a definitive agreement to buy Mills for $1.35 billion last month, made a last-ditch effort to hang onto the deal Thursday night with a new bid, said a source close to the situation.
That led Simon to increase its bid from the $1.56 billion it had offered Feb. 5. Shareholders would get $25.25 per share under the cash deal, Simon said.
The agreement with Simon — already the largest mall developer in the country — is not expected to be beat, but as Brookfield learned last week, Mills could cancel its agreement if a higher bid comes its way.
Brookfield will receive a $40 million fee for the broken agreement.
“We believe that the Mills opera is at an end,” said Stifel Nicolaus analyst David M. Fick in a note to investors. “We do not expect Brookfield or others to make additional offers, and have believed all along that Simon is the single logical buyer for Mills.”
What makes Mills so valuable, despite recent revelations that executives may have mismanaged funds and that it was running out of money, is its 38 shopping centers across the country.
Locally, it owns Lakeforest Mall in Gaithersburg, Potomac Mills and Potomac Town Center in Prince William County, Marley Station in Glen Burnie, Md., and Arundel Mills in Hanover, Md.
A spokesman on behalf of Simon yesterday said that no decision had been made on whether the shopping centers will remain open.
Simon, an Indianapolis real estate investment trust, owns the Fashion Centre at Pentagon City, Bowie Town Center, Leesburg Corner Premium Outlets in Virginia and St. Charles Towne Center in Maryland. The deal is expected to close in 45 days. Mills’ stock fell $1.22 to close at $25.48 yesterday on the New York Stock Exchange. Simon fell 16 cents to $118.24.
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