Simon Property Group Inc. (NYSE:SPG), the largest U.S. mall owner, said Thursday it is acquiring a 28.7 percent interest in Klepierre (EPA:LI), a shopping center operator based in Paris, for about $2 billion.
Simon said it will pay €28 ($37) per share for 54.4 million shares of Klepierre, making it the company's largest shareholder. The deal represents about a 16.5 percent premium over Klepierre's Wednesday close. Its Thursday morning share price up 7.59 percent to €25.17. Simon is acquiring the shares from BNP Paribas and said it doesn't have plans to buy any more shares.
“We are very excited to become the largest shareholder in Klepierre, which has a collection of unique retail assets in strong markets in Europe, said David Simon, the company's chairman and CEO, in a statement. The investment in Klepierre represents an attractive opportunity for SPG as we seek to broaden our global footprint.
Klepierre, Europe's second-largest publicly traded mall operator, owns or manages 271 shopping centers in 13 countries. The company has about half of its portfolio in France and Belgium, one-quarter in Scandinavia and the rest in central and southern Europe. Its assets were valued at €16.2 billion in December 2011. Simon has stakes in 337 malls in America and Asia.
The deal will reduce BNP's stake in Klepierre to 22 percent. The bank, which announced a plan in September to dispose of certain assets, said it plans to hold the shares for at least a year.
As part of the deal, Simon will receive payment of Klepierre's dividend, which will be announced in April.
Separately, Simon said it is acquiring venture partner Farallon Capital Management's stake in 26 U.S. malls for about $1.5 billion. The deal includes repayment of loans.
Both deals are expected to immediately benefit Simon's operations. The company raised its guidance for funds from operations for this year to $7.35 to $7.50 per share, up from $7.20 to $7.30 per share. FFO measures cash flow from real estate properties by adding amortization and depreciation to net income.
Simon's shares fell $1.77 to $136.45 in recent trading.