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Mills receives a higher offer

February 06, 2007|From Reuters

Mall owner Simon Property Group Inc. and Farallon Capital Management, the largest shareholder of beleaguered Mills Corp., offered Monday to buy Mills for $1.56 billion, topping a $1.35-billion offer from Brookfield Asset Management Inc.

The new bid for Chevy Chase, Md.-based Mills is valued at $24 a share. Last month, Canada-based Brookfield agreed to buy Mills for $21 a share.

Indianapolis-based Simon, the largest U.S. shopping center owner, and hedge fund Farallon said their offer would pay Mills shareholders at least six months before the publicly announced expected closing date for the Brookfield deal.

Friedman Billings Ramsey analyst Paul Morgan said the Simon deal would be superior because Simon's size and the quality of its portfolio made its properties desirable to retailers.

"The large portfolio owners have a natural advantage," he said, whereas Brookfield would be new to the field.

Mills has lost about half its stock market value during the last year and faces a Securities and Exchange Commission investigation into its accounting.

Its accounting problems led to firings, layoffs, top management resignations and the SEC probe.

Despite Mills' financial troubles, many of its malls are highly valued, as new ones are scarce because they require locations in densely populated areas where local permitting processes are difficult to navigate.

Shares of Mills closed up $3.72 at $25.87.

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