The Mills Corp. saga has taken another turn. Just when it seemed the final chapter was being written, with Brookfield Asset Management coming in with an offer to buy the company, now another bid has emerged. Simon Property Group and Farallon Partners have presented Mills with a new offer, upping Brookfield's earlier bid.
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All last summer, Mills Corp. languished, unable to attract a buyer to pull the troubled mall developer from the edge of bankruptcy. Finally, in January, by which time the company faced an urgent need for working capital, it nailed down a $7.5 billion deal with Canada's Brookfield Asset Management.
On Monday, that deal was trumped by a joint bid by Simon Property Group and hedge fund Farallon Capital Management and, analysts say, that could flesh out more suitors. Suddenly, the Chevy Chase, Md.-base Mills looks like a hot property—at least relatively. Morningstar analyst Akash Dave and RBC Capital Markets' Richard Moore both say that Mills might fetch twice the $7 billion Simon/Farallon offer (the deal includes $4.9 billion in assumed debt, vs. $5.1 billion suggested by Brookfield's offer).
Dave expects that other mall operators will try to beat Simon, the nation's number one mall owner, to the Mills portfolio, which currently consists of 19 Mills Landmark Centers and 20 Twenty-First Century Retail and Entertainment Centers. He also expects Brookfield, which is using the Mills deal to catapult into the North American retail sector, to counter with a sweetened bid of its own.