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Ryan Udell Comments on Ongoing Litigation Between Taubman Centers/Simon Property Group Proposed Merger

Mergermarket
October 6, 2020

Corporate and Securities Partner Ryan Udell was quoted by Mergermarket about the ongoing litigation between Taubman Centers - a Bloomfield Hills, MI-based high-end mall owner - and Simon Property Group - an Indianapolis, IN-based commercial property REIT. The litigation stems from Simon's attempted termination of the $3.6 billion deal due to a material adverse effect (MAE) and alleging that Taubman violated operating covenants in the merger agreement. In it's suit, Simon alleges that Taubman breached the contract by failing to take measures to mitigate the impact of the COVID-19 pandemic, including refusing to cut costs as malls shuttered and failing to cut executive salaries and fire or furlough employees. Taubman filed a counterclaim, seeking both specific performance of the merger contract (i.e., enforcing the contract) and damages.

Understanding that Taubman has two remedies - (1) damages for losses related to the breach (and Taubman retains its ownership) and (2) requiring the deal to go through by enforcing the agreement - Ryan stated that Taubman is “clearly not required to continue to perform its obligations under that contract in the event it is seeking damages." Additionally, addressing 'specific performance,' Taubman claims that Simon relinquished its rights under the agreement when it terminated the deal. Therefore, Ryan questioned, "Why should Simon have an ongoing approval right over business operations of Taubman?" 

Read the full article here.

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