Simon Out Brookfield In

If the board of directors and management of General Growth Properties gets its way the master planned communities group, which includes Columbia, would be spun off into a new company called General Growth Opportunities. The company reached an agreement today with a Toronto based asset management firm that would split the company in two. According to this story by Alex Veiga in The Chicago Tribune today, the new company “would essentially hold assets the company concedes aren't producing much income currently, including the company's master planned communities and some large retail hubs, such as the South Street Seaport in New York.”

As I speculated in an earlier post, General Growth Properties has turned to Brookfield Asset Management as their White Knight to avoid a hostile takeover by the Simon Property Group. Last week Simon made an unsolicited bid to acquire the company for $10 a share. The deal that GGP’s board made today significantly ups the ante.

“The pact with Brookfield would allow General Growth to raise the money it needs to pay off some $7 billion in debt and interest to its creditors. Stockholders would get $15 a share.”

Brookfield is putting some skin in the game too.

“Brookfield would invest $2.6 billion in cash in exchange for General Growth shares. That would give Brookfield a roughly 30 percent stake in General Growth and the right to nominate three directors to the board.”

The timing of this deal was critical. Next Wednesday GGP is due back in bankruptcy court. Prior to today it had been widely assumed that the company would ask for an extension to submit their final plan. Obviously Simon would have strongly objected to any further delay.

Does this mean it’s over?

Not yet.