Simon Property Group , the largest shopping center company in the United States, will not complete the sale of Taubman Centers, which totaled $ 3.6 billion. The reason for ending the process is still unclear, but the buyer indicated in a press release that his merger agreement ” specifically gave Simon the right to terminate the transaction in the event that a pandemic disproportionately harmed Taubman .” In addition to ending the settlement, Simon filed legal action today against Taubman Centers and The Taubman Realty Group Limited Partnership in the Court for the 6th Oakland County Judicial Circuit in Michigan, as he notes that Taubman has breached the covenants in the settlement. mergers that govern the operation of their businesses.
Simon notes, in written statements, that the merger agreement ended due to two separate and independent reasons: First, ” the COVID-19 pandemic has had an exceptionally material and disproportionate effect on Taubman compared to other participants in the goods industry retail roots . Second, in the wake of the pandemic, Taubman has breached his obligations, which are conditions for closure, related to the operation of his business. In particular, Taubman has not taken steps to mitigate the impact of the pandemic as others in the industry have, even by failing to make essential cuts in operating expenses and capital spending, according to Simon.
The landscape after COVID-19 changed the shopping center industry. What were advantages before, are not so much now. For example, Simon argues that many of Taubman’s commercial properties are gated malls that are in densely populated major metropolitan areas that are highly dependent on national and international tourism, with most also focusing on high-end shopping. All of these factors “have combined to impact Taubman’s business disproportionately due to the COVID-19 pandemic compared to the rest of the retail real estate industry. In addition, Taubman has breached his obligation to operate his business in the ordinary course, “said Simon.