Taubman Centers (TCO) to Reorganize China Unit; Sees Q4 Tax Liability

December 4, 2012 9:31 AM EST Send to a Friend
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Taubman Centers, Inc. (NYSE: TCO) announced a sale of portions of its Taubman TCBL business to China Xintiandi, a subsidiary of Shui On Land (0272.HK) for $15.5 million, an amount approximately equal to Taubman's investment in the business. The transaction has been completed, but remains subject to closing adjustments.

Going forward, Taubman will maintain offices in Beijing and Shanghai and approximately 40 associates will be retained to develop its announced project in Xi'an, China and future investments in China. The business will operate under the name, Taubman Asia.

"With the purchase of TCBL in 2011, we instantly established the execution capability we were seeking in China," said Rene Tremblay, President of Taubman Asia. "It allowed us to analyze with confidence, on an accelerated basis, our first investment in China and a second project that we will announce soon. We recently received an opportunistic offer for the third party platform. As we considered the offer, we decided to move forward with the sale in order to focus exclusively on our core business."

As part of the sale, the non-controlling owners in Taubman TCBL relinquished the capital that was credited to them in connection with Taubman's 2011 acquisition of the company, including their 10 percent ownership interests in investments in China. In addition to the third party contracts, the buyer will assume leases for all the offices except Beijing, employ the majority of the people and acquire the TCBL name, trademark and miscellaneous copyrights.

In connection with the sale, Taubman is expected to incur a tax liability of approximately $3.5 million, which will be recorded in the fourth quarter of 2012. This amount was not included in the company's 2012 earnings guidance issued on October 24.


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