Simon group buys Mills shopping malls

Mills Corp., the owner of 38 shopping malls, agreed to be acquired for $1.64 billion by Simon Property Group Inc. and Farallon Capital Management L.L.C., rejecting an offer from Brookfield Asset Management Inc.

Simon and Farallon will pay $25.25 a share in cash, or $7.9 billion including debt and preferred stock, higher than an earlier offer of $24 a share, the companies said yesterday. Mills, of Chevy Chase, Md., terminated a $21-a-share agreement with Brookfield.

The acquisition allows Indianapolis-based Simon, the biggest U.S. shopping mall owner, with 280 properties, to extend its presence in the United States by adding holdings that include the Del Amo Fashion Center in Los Angeles.

Simon is the majority owner of the King of Prussia mall, and also owns interests in the Deptford, Oxford Valley, Granite Run, Springfield and Montgomery Malls. Mills Corp. properties include Franklin Mills in Philadelphia.

"The Mills opera is at an end," David Fick, an analyst at Stifel Nicolaus & Co., said in a note to investors. "We do not expect Brookfield or others to make additional offers."

Farallon, a $26 billion hedge fund based in San Francisco, expands its real estate portfolio after becoming Mills' biggest investor.

Shares of Mills fell $1.22 to $25.48 on the New York Stock Exchange. Simon, the largest U.S. real estate investment trust by market value, slipped 16 cents to $118.24. Toronto-based Brookfield added 55 cents to $54.40.