Simon Property (SPG) Mulls Bid for General Growth Properties (GGWPQ)

November 18, 2009 11:45 AM EST

Simon Property Group Inc. (NYSE: SPG) has hired Lazard Ltd. And the law firm Wachtell, Lipton, Rosen & Katz to help in coming up with a plan to make a possible bid for all or part of its bankrupt competitor, General Growth Properties Inc. (OTC: GGWPQ), according to reports from the Wall Street Journal.

General Growth is the nation's second largest mall operator, behind Simon, has been operating under Chapter 11 protection since April and says it is close to a deal with lenders to restructure its $11.5 billion in securitized mortgages. The company had to file for protection when it was unable to refinance its $27 billion in debt.

Simon has raised $4 billion in the last year by selling new stock and bonds, yet has not decided whether to make a bid for General Growth.

"It's something we need to monitor and closely evaluate," Simon Chairman and CEO David Simon said in a September interview. "We'd be negligent not to examine what's going on there and to see if there's anything we can bring to the table that would create value for us."

This move by Simon to monitor the General Growth situation comes at a time when the mall operations owners are getting battered by the weakness of the economy and the downturn in consumer spending. However for a company like Simon to acquire a company like General Growth, which operates 200 malls may be an opportunity to enticing to pass by.

As General Growth continues to maneuver towards restructure its securitized mortgages, which could happen as soon as within a week, the company has declined to comment on the possibility of a bid being made by Simon or any other potential buyer.

Shares for Simon are up nearly 3 percent to $74.18 following the news. Shares of General Growth Properties, which trade on the loosely-monitored pink sheets, are up 31 percent.

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