Macerich Co., which has agreed to invest more than $100 million in the redevelopment of the Gallery at Market East, on Tuesday rejected a $16 billion bid from Simon Property Group, the nation's largest owner of shopping malls.

Macerich said the unsolicited bid by Simon - which counts King of Prussia, Philadelphia Mills, and Bucks County's Oxford Valley among its nine malls in the Philadelphia region - substantially undervalued the company.

Santa Monica, Calif.-based Macerich - which owns or has stakes in more than 50 malls nationwide - also took measures Tuesday to thwart a Simon takeover, including staggering the election of directors, which would make it more difficult to oust the Macerich board, and adopting a "poison pill" defense that raises the price Simon would have to pay because more shares of Macerich would be issued.

"After careful consideration," Macerich's board unanimously determined that the offer "fails to reflect the full value of our portfolio of unique and irreplaceable assets and our positive growth prospects," Arthur Coppola, the company's chairman and chief executive officer, said in a statement.

Simon went public last week with its $91-a-share offer after being rebuffed by Macerich privately.

Shares in both companies slipped Tuesday. Macerich's stock closed at $91.60, down $3.29 or 3.47 percent. Simon's stock closed at $186.13, down 94 cents or 0.5 percent.

In July, Macerich agreed to invest $107 million in the Gallery in a joint venture with mall manager Pennsylvania Real Estate Investment Trust.

After Simon made its bid for Macerich, PREIT spokeswoman Heather Crowell said the offer did not "change either the plans or the schedule for the redevelopment of the Gallery."

Macerich, which lately renovated Deptford Mall, has promised to do the same for the Gallery once city government commits enough public dollars to guarantee profits.

Buying Macerich would expand Indianapolis-based Simon's reach at a time when high-quality retail centers rarely come up for sale. Macerich's properties include Tysons Corner Center in Virginia, Fashion Outlets of Niagara Falls in New York, and Santa Monica Place in Southern California.

In a statement Tuesday, Simon chairman and CEO David Simon said Macerich's "scorched earth" rejection of the offer is based on a "rosy view of its future prospects."

"Shareholders should closely examine Macerich's history of delivering on its forecasts, which pales in comparison to Simon's long track record of delivering industry-leading results," Simon said.