SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
November 13, 2002
SIMON PROPERTY GROUP, INC.
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(Exact name of registrant as specified in its charter)
Delaware 001-14469 046268599
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
115 West Washington Street, Indianapolis, Indiana 46204
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(Address of principal executive offices and zip code)
(317) 636-1600
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or address, if changed since last report)
Item 5. Other Events.
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On November 13, 2002, Simon Property Group, Inc. (the "Company") announced
that it had sent a letter to the Board of Directors of Taubman Centers, Inc., a
Michigan corporation ("Taubman"), proposing to acquire the outstanding shares of
common stock of Taubman for $17.50 per share in cash. A copy of the press
release is attached as an exhibit hereto and is incorporated by reference
herein.
On November 13, 2002, the Company made available certain materials related
to the proposed offer to Taubman on its website, located under the corporate
information tab at www.shopsimon.com. A copy of those materials is attached as
an exhibit hereto and is incorporated by reference herein.
Item 7. Financial Statements and Exhibits.
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(a) Financial statements of businesses acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
(c) Exhibits.
99.1 Press Release, dated November 13, 2002.
99.2 Materials Regarding Proposed Offer, dated November
13, 2002.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SIMON PROPERTY GROUP, INC.
Date: November 13, 2002
By: /s/ James M. Barkley
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Name: James M. Barkley
Title: Secretary
EXHIBIT INDEX
Exhibit Description
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99.1 Press Release, dated November 13, 2002.
99.2 Materials Regarding Proposed Offer, dated November
13, 2002.
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
CONTACTS:
Investors Media
Shelly Doran George Sard/Paul Caminiti/Hugh Burns
Simon Property Group, Inc. Citigate Sard Verbinnen
317/685-7330 212/687-8080
SIMON PROPOSES ALL-CASH OFFER
TO ACQUIRE TAUBMAN FOR $17.50 PER SHARE
Price Is Higher Than Taubman Shares Have Ever Traded
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INDIANAPOLIS, November 13, 2002 - Simon Property Group, Inc. (NYSE: SPG) today
made a written offer to acquire Taubman Centers, Inc. (NYSE: TCO) for $17.50 per
share in cash, a substantial current premium and a price higher than Taubman
Centers shares have ever traded. The letter sent today to the Board of Directors
of Taubman Centers by David Simon, Chief Executive Officer of Simon Property
Group, follows:
Dear Members of the Board of Directors:
As you may know, we recently made a written offer to Robert S. Taubman to pay
$17.50 in cash for each share of Taubman Centers, Inc. (the "Company") common
stock. Our all-cash offer would deliver to all Taubman shareholders a
substantial premium -- approximately 18% above yesterday's closing price and 30%
above the price on the day we initially made our offer -- and it exceeds the
highest price at which Taubman shares have ever traded. Our offer represents a
compelling strategic and financial transaction that would produce substantial
and immediate value for all of your shareholders. We can move quickly since our
offer is not subject to the receipt of financing or any due diligence
investigation of the Company.
On several occasions, we have communicated our offer to Mr. Taubman and
suggested that we have an opportunity to discuss it with the members of
Taubman's board of directors. We wrote Mr. Taubman on October 16, 2002, to
request a meeting to present our offer. He refused to meet. On October 22, 2002,
we again wrote Mr. Taubman, this time setting forth the basic terms of our
offer. Once again, he refused even to have a discussion, writing to us on
October 28, 2002, that "the Company has no interest whatsoever in pursuing a
sale transaction...."
We are dismayed that Mr. Taubman continues in his refusal even to discuss our
offer - or indeed any sale transaction, particularly in light of the fact that
we have expressed a willingness to be very flexible with respect to the
structure of the proposed transaction. The offer is not conditioned upon any
participation by the Taubman family. Instead we have agreed to accommodate any
desire by the Taubman family to retain its economic interest in the Taubman
Realty Group Limited Partnership, or, at their option, to participate in the
transaction, and receive either cash or equivalent value for their existing
partnership interests by exchanging them on a tax efficient basis for
partnership interests in the Simon operating partnership.
-1-
Since the Taubman family can choose to (1) retain its current Taubman
partnership units, (2) convert into Simon partnership units, or (3) sell for
cash, we can only conclude that Mr. Taubman's refusal even to discuss our offer
reflects the Taubman family's desire not to permit the Company to be sold under
any circumstances. While it is entirely appropriate for the Taubman family to
retain the right to choose between various options with respect to the treatment
of its own partnership units, it is improper for these insiders to prevent
public shareholders from choosing to receive a premium for their shares.
Mr. Taubman apparently believes the Taubman family is not accountable to the
public shareholders because of the family's claimed blocking position - via the
Series B preferred stock - which was surreptitiously issued in a "restructuring"
transaction many years after the Company's initial public offering without
either proper disclosure or a shareholder vote. We question both the propriety
and validity of a transaction which attempts to transfer to the Taubman family
control and a permanent veto over material decisions that rightfully belong to
the public shareholders of Taubman - such as an all-cash, premium offer to
acquire the Company.
The effect of the Series B preferred stock, for which the Taubman family paid a
total of only $38,400.00, is to disenfranchise the public shareholders. This
entrenchment device is a permanent corporate governance defect embedded in the
Company's structure - and it continues to hurt the public shareholders. Indeed,
between the time the Series B shares were issued to the Taubman family in 1998
and our October 22 offer letter, the price of Taubman common shares has fallen
by 4%.
We understand that the obstacles created in the governance structure by the
Taubman family, at the expense of the public shareholders, are significant.
However, with the cooperation of the Board of Directors, acting as fiduciaries
for the common shareholders, we believe these obstacles are surmountable. We
also trust that undisclosed economic or governance burdens have not been, and
will not be, imposed on Taubman in response to our offer or otherwise.
We hope the Board will agree with us that our offer provides an excellent
opportunity for Taubman shareholders to realize immediate liquidity and full
value for their shares to an extent not likely to be available to them in the
marketplace or in any alternative transaction. At a time when good corporate
governance is particularly important to investors, we seek your help in
restoring the rights of the public shareholders of Taubman.
We prefer to complete this acquisition through a negotiated transaction. We
stand ready to make a detailed presentation of our offer to the Board and to
answer any questions you may have.
Very truly yours,
David Simon
Chief Executive Officer
* * *
Shareholders may visit the corporate information tab on www.shopsimon.com for
additional information regarding Simon's proposed offer to acquire Taubman.
-2-
About Simon
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Headquartered in Indianapolis, Indiana, Simon is a real estate investment trust
engaged in the ownership and management of income-producing properties,
primarily regional malls and community shopping centers. Through its subsidiary
partnerships, it currently owns or has an interest in 249 properties containing
an aggregate of 185.8 million square feet of gross leasable area in 36 states,
as well as eight assets in Europe and Canada and ownership interests in other
real estate assets. Additional Simon information is available at
www.shopsimon.com
# # #
This news release is for informational purposes only and is not an offer to buy
or the solicitation of an offer to sell any Taubman shares, and is not a
solicitation of a proxy.
Forward-looking statements
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This release contains some forward-looking statements as defined by the federal
securities laws which are based on our current expectations and assumptions,
which are subject to a number of risks and uncertainties that could cause actual
results to differ materially from those anticipated, projected or implied. We
undertake no obligation to publicly update any forward-looking statements,
whether as a result of new information, future events or otherwise.
EXHIBIT 99.2
November 2002
SIMON(TM)
Proposed All-Cash Offer to
Acquire Taubman Centers, Inc.
Forward Looking Statement
Estimates of future FFO, EBITDA, revenue and synergies are, and certain other
matters discussed herein may be, deemed forward-looking statements within the
meaning of the federal securities laws. Although we believe the expectations
reflected in any forward-looking statements are based on reasonable assumptions,
we can give no assurance that our expectations will be attained, and it is
possible that our actual results may differ materially from those indicated by
these forward-looking statements due to a variety of risks and uncertainties.
Those risks and uncertainties include, but are not limited to, the national,
regional and local economic climate, competitive market forces, changes in
market rental rates, trends in the retail industry, the inability to collect
rent due to the bankruptcy or insolvency of tenants or otherwise, and changes in
market rates of interest.
These materials are for informational purposes only and are not an offer to buy
or the solicitation of an offer to sell any Taubman shares, and are not a
solicitation of a proxy.
-2-
Transaction Rationale
>> Simon's $17.50 per share all-cash offer is financially compelling and
will produce substantial and immediate value for all Taubman
shareholders
>> Strategic acquisition of Taubman would further enhance Simon's position
as the nation's premier owner and manager of shopping malls
-3-
A Compelling Transaction For Taubman
>> $17.50 offer exceeds Taubman's all-time high
- 30% premium over Taubman price when 10/22 offer letter sent
- 18% current premium over Taubman price on 11/12
- 10% premium over highest-ever closing price of Taubman shares
- Above every Wall Street estimate of Taubman's NAV
- Compelling premium to other public REIT acquisitions
>> Offer not contingent on financing or due diligence
>> Complete flexibility for Taubman family:
- Retain Taubman partnership units, or
- Convert at $17.50 value to Simon partnership units, or
- Sell for cash
-4-
A Compelling Opportunity For Simon
>> Taubman has outstanding portfolio of properties
>> Despite high-quality assets, Taubman has underperformed for shareholders
- Constantly shifting business and financing strategies
- Balance sheet constraints
- Underperforming new developments
- Flawed corporate governance
>> Simon is uniquely positioned to generate more cash flow from Taubman's
high-quality assets
-5-
Taubman's Failure To Create Shareholder Value
Since 1998 "restructuring" -- which improperly created blocking
position for Taubman Family -- TCO stock has declined 4%
[GRAPH]
The graph depicts the share price of the common stock of Taubman Centers, Inc.
beginning on September 30, 1998 and ending on October 22, 2002.
EDGAR representation of data points used in printed graphic:
Date Share Price
- ---- -----------
9/30/98 $14.00
10/22/02 $13.50
Performance of TCO shares from effective date of entrenching transaction
(9/30/98) through date Simon sent written offer to Taubman (10/22/02)
-6-
Simon Can Unlock Value of Taubman Assets
>> As the nation's premier owner and manager of shopping malls, Simon can
improve Taubman's portfolio:
- Increase occupancy
- Reduce operating costs
- Generate ancillary revenue streams
>> Simon has a strong balance sheet and access to lower-cost capital
>> Simon has demonstrated track record of acquiring and assimilating
high-quality properties efficiently and profitably
>> Simon can stabilize Taubman's new developments
-7-
Enhance Simon's Nationwide Portfolio
>> Taubman properties are an excellent geographic fit with Simon's existing
portfolio
>> Fortifies presence in key East and West coast markets
>> Further enhances Simon portfolio with franchise assets, including The
Mall at Short Hills, Cherry Creek Mall and Beverly Center
-8-
Builds on Simon's Market Leadership
>> Creates portfolio unequaled in quality and depth
>> Combined company pro forma will have:
- $25 billion total enterprise value
- $2.5 billion total consolidated revenue *
- $2.0 billion annualized EBITDA *
* 2002 projected
-9-
Creates Value for Simon Shareholders
>> Transaction expected to be approximately 4-5% accretive to Simon's FFO
per share in Year One
>> We expect to:
- Increase occupancy
- Utilize Simon's leasing strength
- Increase revenues through Simon Brand Ventures marketing
initiatives
- Generate ancillary revenues through Simon Business Network programs
- Implement Simon's more robust cart and kiosk program
- Benefit from Simon's lower cost of capital
- Reduce operating costs
-10-
Simon Ready To Proceed
>> No due diligence required
>> No financing contingency
>> Transaction can be completed with existing Simon $1.25B corporate credit
facility
>> Simon will arrange permanent financing consistent with past
acquisitions, current capital structure, and current credit ratios
-11-
Taubman's 1998 Restructuring: Before
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[CHART]
The chart is a depiction of the ownership structure controlling the Taubman
assets prior to September 30, 1998, which is as follows: The Taubman family
holds 7% of the voting stock of Taubman Centers, Inc. ("TCO"), while non-Taubman
family shareholders holds 93% of the voting stock of TCO. TCO, in turn, owns a
partnership interest in Taubman Realty Group Partnership ("TRG"), which controls
the Taubman assets. In addition to TCO, the Taubman family and the GM Pension
Trusts own partnership interests in TRG. TRG is governed by a 13 member
partnership committee, to which TCO has the right to designate 5 independent
members, the Taubman family has the right to designate 4 members and the GM
Pension Trusts have the right to designate 4 members.
>> Assets governed by majority vote of 13-member Partnership Committee
>> Taubman Family had only 4 of 13 seats - NO blocking position
-12-
Taubman's 1998 Restructuring: After
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[CHART]
The chart is a depiction of the ownership structure controlling the Taubman
assets after September 30, 1998, which is as follows: The Taubman family holds
36% of the voting stock of TCO, while non-Taubman family shareholders hold 64%
of the voting stock of TCO. TCO, in turn, owns a partnership interest in TRG,
which controls the Taubman assets. In addition to TCO, the Taubman family (but
not the GM Pension Trusts) owns partnership interests in TRG. TRG is no longer
governed by the 13 member partnership committee.
>> Assets now governed by 2/3 vote of TCO shareholders
>> Series B shares issued to Taubman Family for total of $38,400.00
>> Series B gives Taubman Family blocking position with 36% of vote
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-13-
Taubman Has Disenfranchised Shareholders
Board Can't Waive Excess Share Provision in Taubman Charter
+
Charter Amendments Require 2/3 Shareholder Vote
+
Series B Preferred Shares Give Taubman Family 36% of Vote
+
B Shares Issued Without Shareholder Vote or Proper Disclosure
+
Taubman Family Paid Only $38,400.00 For Blocking Position
=
Permanent Corporate Governance Defect
-14-
Taubman Shareholders Must Speak Up
>> Simon prefers to complete acquisition through negotiated transaction
>> Family's blocking position improperly obtained -- egregious corporate
governance defect should not keep Taubman shareholders --- from premium
offer
>> Corporate governance obstacles are surmountable if Board upholds
fiduciary duty to common shareholders
>> Tell Board you support our $17.50 per share cash offer
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