UPDATE: Piper Sandler Downgrades Taubman Centers (TCO) to Underweight, Following Merger Termination
(Updated to add court news)
Piper Sandler analyst Alexander D. Goldfarb downgraded Taubman Centers (NYSE: TCO) from Overweight to Underweight.
As a reminder, Simon Property Group, Inc. (NYSE: SPG) announced earlier today that it has exercised its contractual rights to terminate its February 9, 2020 merger agreement with Taubman Centers, Inc. (NYSE: TCO). Simon also filed an action today in the Circuit Court for the 6th Judicial Circuit of Oakland County, Michigan against Taubman Centers, Inc. and The Taubman Realty Group Limited Partnership requesting a declaration that Taubman has suffered a Material Adverse Event ("MAE") under the Merger Agreement and has breached the covenants in the Merger Agreement governing the operation of Taubman's business.
As detailed in the complaint filed this morning, Simon's termination of the Merger Agreement is based on two separate and independent grounds. First, the COVID-19 pandemic has had a uniquely material and disproportionate effect on Taubman compared with other participants in the retail real estate industry. Second, in the wake of the pandemic, Taubman has breached its obligations, which are conditions to closing, relating to the operation of its business. In particular, Taubman has failed to take steps to mitigate the impact of the pandemic as others in the industry have, including by not making essential cuts in operating expenses and capital expenditures.
Shares of Taubman Centers (NYSE: TCO) trade down -21% in afternoon trading in response to merger termination news.
For an analyst ratings summary and ratings history on Taubman Centers click here. For more ratings news on Taubman Centers click here.
Shares of Taubman Centers closed at $45.25 yesterday.