Simon Property Group has killed its $3.6bn acquisition of Taubman Centers on the grounds that the company had failed to deal with fallout from the coronavirus pandemic. It claimed Taubman had suffered a “Material Adverse Event” as defined the merger agreement, which gave Simon the legal right to nix the entire deal. The Covid-19 crisis, wrote Simon “has had a uniquely material and disproportionate effect on Taubman compared with other participants in the retail real estate industry.” Simon also accused Taubman of failing to cut operating expenses and capital expenditures as the crisis deepened, which hurt the value of the company. Not surprisingly, Taubman shares collapsed at the news, dropping 40 percent before recovering later in the day to just a 22 percent loss. That still made it the worst day for the company’s share price since 2008. There’s speculation that this may simply be the latest chapter in a complex game, the logic being that if Taubman’s shares were to fall enough, Simon could try to renegotiate the deal at a lower price.
