INDIANAPOLIS–Simon Properties, based in Indianapolis, will not merge with Taubman because of the coronavirus pandemic. Simon, which owns malls across the country, was supposed to merge with Taubman, which owns high-end malls, in a deal reached in February.
But, Simon said in a news release Wednesday, that a clause in the contract gave them the right to back out, were Taubman to be hurt by a pandemic.
“Simon’s termination of the Merger Agreement is based on two separate and independent grounds,” read the news release. “First, the COVID-19 pandemic has had a uniquely material and disproportionate effect on Taubman compared with other participants in the retail real estate industry. Second, in the wake of the pandemic, Taubman has breached its obligations, which are conditions to closing, relating to the operation of its business. In particular, Taubman has failed to take steps to mitigate the impact of the pandemic as others in the industry have, including by not making essential cuts in operating expenses and capital expenditures.”
Simon sued Taubman over what the company calls Tabman’s failures to “operate in ordinary course”.
Taubman’s shares fell over 40 percent. Those shares had been down only one percent, previously.