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Law360 (November 15, 2020, 8:21 PM EST) -- Simon Property Group Inc. and Taubman Centers Inc. have settled their dispute over a $3.6 billion February merger agreement and, with the help of five law firms, have agreed to a new deal for Simon to instead pay close to $3 billion for the rival indoor mall real estate investment trust.
The companies on Sunday said they've resolved their dispute in the Circuit Court for the Sixth Judicial Circuit of Oakland County, Michigan, and have agreed for Simon to now pay $43 per share for Taubman. The parties late last week had appeared to be primed for a trial.
Wachtell Lipton Rosen & Katz and Honigman LLP are representing Taubman on the latest M&A deal, while Paul Weiss Rifkind Wharton & Garrison LLP and Latham & Watkins LLP are guiding Simon on the matter. Kirkland & Ellis LLP is assisting the Taubman special committee of the board of directors.
"The boards of directors of Simon and Taubman, including the special committee of independent directors of Taubman, have approved the terms of the transaction," the companies said in a joint statement Sunday. "The modified merger agreement provides that Taubman will not declare or pay a dividend on its common stock prior to March 1, 2021, and then, only subject to certain limitations and conditions."
The companies on Feb. 10 reached a deal for Simon to pay $52.50 per Taubman share, or $3.6 billion, but as Taubman's share price plummeted because of the COVID-19 pandemic, Simon sued Taubman, hoping to get off the hook of paying that price given that Taubman's shares were trading below $40 a share.
Shares in Taubman were trading at close to $33 a share in late October but have rallied in the past two weeks to close at $39.48 on Friday.
Simon had argued in part that a material adverse change clause in the February purchase-and-sale agreement gave it the right to exit the deal, as it gave Simon the right to call the deal off if a pandemic had disproportionately affected Taubman. The parties at the time were aware of COVID-19 as it had been spreading in China's Hubei province, but signed the deal weeks before the surge in cases in the U.S.
Simon argued in court this summer that Taubman, an indoor mall owner, operated within a broad retail sector that includes open-air shopping centers, grocery stores and indoor malls, and couched in those terms, indoor malls and thus Taubman had been hit harder by COVID-19 than grocery stores and open-air shopping centers.
Taubman, meanwhile, argued the frame in question was indoor malls, suggesting the pandemic hadn't hit it harder than other indoor mall operators.
Experts told Law360 in August that Simon's bar of winning that argument in court was extremely high.
The new deal is expected to close in late 2020 or early 2021.
Counsel for the parties couldn't be immediately reached for comment on Sunday.
Simon's financial adviser is BofA Securities and Lazard Ltd. is advising the special committee of Taubman's board of directors.
Simon is represented on the M&A deal by Robert Schumer, Lewis Clayton and Michael Vogel of Paul Weiss, and by Julian Kleindorfer, Mark Gerstein, Jason Morelli, Lewis Kneib, Owen Alexander, Andrew Tremble, Victoria Wolfe, Ana O'Brien, Janet Hsu, David Taub, Michelle Carpenter, Daniel Gocek, Robert Buday, Zonia Medina, Jeffrey Tochner, Pelin Serpin and Sara Orr of Latham & Watkins.
Taubman is represented on the M&A deal by Adam Emmerich, William Savitt, Viktor Sapezhnikov, Robin Panovka, Wayne M. Carlin, Stephen DiPrima, Peter Hein, Leo Strine Jr., Claudia Morgan, Daniel Rosenblum, Jacob Miller, Kyle Lachmund, Stephen Levandoski, Daniel Listwa, Amanda Lee, Ilene Knable Gotts, Andrea Wahlquist, Jodi Schwartz and Liam Murphy of Wachtell, and by Joseph Aviv, Michael Ben, Emily Johns, Martin Katz, Joel Krugel and Shawn Strand of Honigman.
The Taubman special committee of the board of directors is represented on the M&A deal by Eric Schiele, Michael Brueck, Marshall Shaffer, Sandra Goldstein and Stefan Atkinson of Kirkland.
Simon is represented in the Michigan dispute by Thomas Cranmer, A. Michael Palizzi and Larry Saylor of Miller Canfield Paddock and Stone PLC, and Paul Weiss.
Taubman is represented in the Michigan dispute by Honigman, and Wachtell.
The Taubman special committee of the board of directors is represented in the Michigan dispute by Keefe Brooks and Steven Ribiat of Brooks Wilkins Sharkey & Turco PLLC, and Kirkland.
The Michigan case is Simon Property Group Inc. vs. Taubman Centers Inc., case number 2020-181675-CB, in the Circuit Court for the Sixth Judicial Circuit of Oakland County, Michigan.
--Additional reporting by Elise Hansen. Editing by Adam LoBelia.
Update: This article has been updated to include additional counsel information.
Correction: An earlier version of this article included incorrect information about Taubman's financial adviser for the latest merger agreement. The errors have been corrected.
For a reprint of this article, please contact reprints@law360.com.
