Simon Property and Farallon
To Buy Mills for $1.64 Billion

Mills Corp., a shopping mall real estate investment trust, said Friday it agreed to be acquired by a joint venture between Simon Property Group Inc. and hedge fund Farallon Capital Management for $25.25 per share in cash, or about $1.64 billion.

Including debt, the deal is valued at $7.9 billion.

The offer is higher than a previous offer from Simon Property, the nation's largest real estate investment trust by market value, and Farallon, Mills' largest shareholder, for $24 a share, or about $1.56 billion.

It is also superior to an offer from Brookfield Asset Management Inc. Last month, Mills struck a deal to be acquired by Brookfield for about $21 a share, or $1.35 billion. On Tuesday, however, Mills said it determined that Simon's $24 a share offer was superior to Brookfield's offer.

It was not clear why the Simon Property-Farallon venture had sweetened its bid from Tuesday's offer.

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.

The latest Simon Property-Farallon offer, expected to close in about 45 days, was unanimously approved by Mills' board.

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.

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