Mills Finds Simon-Farallon Bid
Superior to Brookfield Asset's

Mills Corp. Tuesday determined the buyout offer from Simon Property Group Inc. and Farallon Capital Management LLC for $24 a share, or about $1.56 billion, is superior to Brookfield Asset Management Inc.'s buyout offer, and as a result Mills' board approved the termination of the agreement with Brookfield.

Last month, Mills struck a deal to be acquired by Brookfield for about $21 a share, or $1.35 billion. Mills met last Tuesday to consider the offer from  Farallon Capital, its largest shareholder, and Simon, the country's largest real estate investment trust by market value.

Mills has more than $6 billion in debt that a suitor would assume.

Before the Simon/Farallon group weighed in with its bid, investors had for weeks been expecting a higher offer for Mills, a real-estate investment trust with dozens of shopping malls around the country.

Mills said the board considered the advice of its outside legal counsel and independent financial advisers, as well as other factors including the higher per-share consideration and the likelihood that the Simon/Farallon transaction could be completed faster than the Brookfield deal.

Simon and Farallon are structuring their proposal as a cash tender offer, which would allow Mills shareholders to get their cash within a matter of weeks, according to The Wall Street Journal. That could be as much as six months earlier than Brookfield's plan. The team has also lined up support of another large shareholder, Stark Master Fund Ltd., which has given the duo an option to acquire its 2.8 million Mills shares.

Mills, Chevy Chase, Md., will enter an agreement with Simon and Farallon unless, within three business days, Brookfield amends the existing agreement or irrevocably agrees to enter into an amendment to that agreement.

Mills said it's ready and willing to negotiate such an amendment to the Brookfield merger agreement.

The Simon/Farallon deal comes as hedge funds have become more comfortable assuming controlling ownership stakes and have been able to find partners among corporations like Simon, and also highlights the continuing rise of commercial real estate, despite the decline of residential property values.

Brookfield, which owns a controlling stake in office-building owner Brookfield Properties Corp., focuses on long-term, income-producing investments such as hydropower, timber and commercial real estate, and has more than $50 billion in assets under management. But most of its commercial-real-estate holdings are in office buildings, not retail. That raised questions among some analysts.

The earlier Brookfield agreement appeared to end a 15-month drama for Mills, which ran into ill-fated developments and accounting woes that may have been a result of misconduct, according to the company.

J.P. Morgan Securities Inc. and Goldman Sachs & Co. are serving as financial advisors and Wachtell, Lipton, Rosen & Katz and Hogan & Hartson LLP are serving as legal advisors to Mills.

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