Tuesday, February 16, 2010

SPG Makes Offer to General Growth Properties

Interesting Tuesday as we awoke to news that Simon Property Group made an offer for General Growth Properties.  For equity holders, it amounts to about $9/share, which was below last Friday's close.  This is a classic low-ball offer.  This type of offer may have worked a few months back, but GGP is on track to emerge from bankruptcy, and many have expressed interest in their assets.  The market obviously feels shares are worth more, as they are currently up 25% as I write this. 

When I see statements like this from their CEO, I knew it was a low-ball offer. " Simon is in a unique position of being able of being able to offer General Growth creditors and shareholders full, fair and immediate value."  Immediate value is the key statement.  They're looking for a quick close before the competition heats up for GGP's assets.  I think its too late for that at this point.  It will be interesting to see the response not only from GGP, but from some of the large shareholders like Bill Ackman.  

Todd Sullivan at Value Plays has had the playbook for this whole thing, and I thank him for that.  If you haven't seen his site, you need to get there and subscribe.  

I'm into GGP at $1.79 after reading Todd's analysis.  My only regret is not buying more shares.  

We'll see where this takes us, but its likely a lot more will be happening here soon.  

Disclosure: Long GGWPQ

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