Cited: BusinessWeek/Reuters
A General Growth Properties Inc. shareholder has filed suit against the company’s directors, saying they should not have rejected Simon Property Group Inc’s buyout offer of $10 billion, Bloomberg News reported on February 13.
It reported the suit was filed on February 19 in Cook County Circuit Court in Chicago by investor James Young and accused John Bucksbaum, chairman of the bankrupt Chicago-based mall operator, and six board members with breach of fiduciary duty.
General Growth spokesman David Keating declined comment, saying in an email message that he has not seen the suit and that he refrains from making comments about litigation matters. Attempts to contact Simon Property and Young for comment were not successful.
Simon Property, the No. 1 U.S. shopping mall owner, revealed its buyout offer on February 16, saying it decided to go public after General Growth rebuffed its offer of serious negotiations.
Simon Property said on February 19 it could not agree to conditions General Growth Properties wanted to impose before talks on Simon’s bid for the No. 2 U.S. mall owner. General Growth’s terms for a nondisclosure agreement were not constructive and “make clear your apparent interest in precluding our offer from moving forward or being considered by your stakeholders,” Simon said in a letter to its smaller rival.
The letter is the latest salvo in a battle that has rapidly escalated after Simon went public with its offer following months of behind-the-scenes maneuvering.
General Growth, which became the biggest real estate failure in U.S. history when it filed for bankruptcy in April 2009, has said it is pursuing an exit plan which includes emerging from bankruptcy as a stand-alone entity as well as potential deals.
General Growth has said it wants Simon to take part in its process, but the two sides have not been able to agree on the terms of a nondisclosure agreement, which is usually signed before a company opens up its books to another.
Chairman John Bucksbaum and six other board members were accused of breaching their fiduciary duty to the bankrupt mall operator’s investors when they turned down Simon’s bid, according to a complaint filed today in state court in Chicago, where General Growth is based.
“This conduct is substantially unfair to GGP and the company’s public shareholders,” investor James Young said in his complaint brought on behalf of stockholders and for the benefit of the company.
Simon, based in Indianapolis, offered to buy its largest rival out of bankruptcy for more than $10 billion in a bid made public Feb. 16. Under that offer, shareholders would get about $9 a share, including $6 in cash. General Growth said the price was too low and that it would invite other potential buyers to make bids.
David C. Keating, a company spokesman, said he hadn’t seen the lawsuit and couldn’t immediately comment on it.
Young seeks a court order barring the directors from entering into any contract that harms the company or its shareholders, or makes it more difficult or costly for a would- be purchaser to acquire it, plus other relief including the reimbursement of attorneys’ fees and costs incurred.
Two people with knowledge of the discussions stated that Blackstone Group LP, the world’s largest private and the firm, may be joining Simon’s bid. It was also stated that the negotiations are private and Simon would lead any resulting partnership that may come out of the preliminary talks between Blackstone and Simon.
More information on the case: Young v. Bucksbaum, 10CH07080, Cook County, Circuit Court, Chancery Division (Chicago).
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My Take: I thought a corporation had to get permission from its stockholders on decisions such as this. I am no expert, but it seems logical since the stockholders are basically the owners of the company. I wonder, would this be the kind of situation where a collaborative lawyer would be needed? Or is that just another type of divorce lawyer?
I know there are lawyers everywhere for every aspect of business and personal areas. But I really could not say what kind of lawyer would handle this type of lawsuit. I do know that a divorce attorney is different from a Redwood City CA DUI attorney. I also understand that a alimony lawyer is a specialized form of a New Jersey divorce lawyer. And these are all miles apart from a Redwood City criminal defense lawyer even though they are all lawyers or attorneys.
After reading my comments, I sound more like an advocate for attorneys and giving my comments. I have a bad habit of going off on a tangent. Sorry about that folks! 
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