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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 14D-9/A
SOLICITATION/RECOMMENDATION STATEMENT UNDER
SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 8)
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TAUBMAN CENTERS, INC.
(Name of Subject Company)
TAUBMAN CENTERS, INC.
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
876664103
(CUSIP Number of Class of Securities)
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LISA A. PAYNE
TAUBMAN CENTERS, INC.
200 EAST LONG LAKE ROAD
SUITE 300, P.O. BOX 200
BLOOMFIELD HILLS, MICHIGAN 48303
(248) 258-6800
(Name, Address and Telephone Number of Person Authorized to Receive Notice and
Communications on Behalf of the Person(s) Filing Statement)
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WITH COPIES TO:
CYRIL MOSCOW JEFFREY H. MIRO ADAM O. EMMERICH
HONIGMAN MILLER SCHWARTZ AND KENNETH H. GOLD TREVOR S. NORWITZ
COHN, LLP MIRO, WEINER & KREIMER ROBIN PANOVKA
2290 FIRST NATIONAL BUILDING 38500 WOODWARD AVENUE, WACHTELL, LIPTON, ROSEN
660 WOODWARD AVENUE SUITE 100 & KATZ
DETROIT, MICHIGAN 48226-3583 BLOOMFIELD HILLS, 51 WEST 52ND STREET
(313) 465-7000 MICHIGAN 48303 NEW YORK, NEW YORK 10019
(248) 646-2400 (212) 403-1000
[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
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This Amendment No. 8 amends and supplements the Solicitation/
Recommendation Statement on Schedule 14D-9 initially filed with the Securities
and Exchange Commission (the "Commission") on December 11, 2002 (as subsequently
amended, the "Schedule 14D-9"), by Taubman Centers, Inc., a Michigan corporation
(the "Company" or "Taubman Centers").
The original filing on Schedule 14D-9 related to the tender offer made
by Simon Property Acquisitions, Inc. ("Offeror"), a wholly owned subsidiary of
Simon Property Group, Inc. ("Simon"), as set forth in a Tender Offer Statement
filed by Simon on Schedule TO, dated December 5, 2002 (the "Schedule TO"), to
pay $18.00 net to the seller in cash, without interest thereon, for each Common
Share, upon the terms and subject to the conditions set forth in the Schedule
TO.
On January 15, 2003, Simon filed Amendment No. 5, and on January 16,
2003, Simon filed Amendments No. 6 and 7 (together, the "Amendments"). According
to the Amendments, the Offer has been amended in several material respects by a
Supplement thereto dated January 16, 2003. These amendments reflect the fact
that: (i) Westfield America, Inc. ("Westfield") has joined in the Offer and is
now a filing person; (ii) the price per share to be paid under the Offer has
been increased to $20 per Common Share, net to the seller in cash, without
interest thereon; and (iii) the expiration date of the Offer has been extended
until 12:00 midnight, New York City time, on February 14, 2003. Unless otherwise
indicated, all capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Schedule 14D-9.
ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSON.
(b) TENDER OFFER OF THE PURCHASER
Item 2(b) of the Schedule 14D-9 is hereby amended and supplemented by adding the
following:
On January 16, 2003, the Offeror amended and supplemented its Offer to
Purchase, dated December 5, 2002 in a Supplement to the Offer to Purchase, dated
January 15, 2003 (the "Supplement"), as filed with the Securities and Exchange
Commission on Schedule TO-T/A on January 16, 2003 (the "Schedule TO-T/A"), and
in the related revised Letter of Transmittal (which, together with any
supplements or amendments, collectively constitute the "Revised Offer"). The
Revised Offer added Westfield America, Inc. ("Westfield") as a filing person and
additional offeror. Offeror and Westfield increased the price per share to be
paid pursuant to the Offer from $18.00 net to the seller in cash without
interest thereon, for each Common Share, which the Board has previously rejected
as inadequate, to $20.00 net to the seller in cash without interest thereon, for
each Common Share, upon the terms and conditions set forth in the Supplement.
Pursuant to the Supplement, the Revised Offer is scheduled to expire at 12:00
midnight, New York City time, on February 14, 2003. The Schedule TO-T/A states
that the address of Westfield's principal executive offices is 11601 Wilshire
Boulevard, 12th Floor, Los Angeles, CA 90025 and that Westfield's telephone
number at such location is (310) 478-4456.
ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSON.
(c) TRANSACTIONS WITH SIMON AND WESTFIELD
Item 2(c) of the Schedule 14D-9 is hereby amended and supplemented by replacing
the first paragraph thereof with the following:
Certain affiliates of the Company, Simon and Westfield, along
with certain other entities, were members in MerchantWired, LLC, a limited
liability company formed for the purpose of providing high speed broad band
networks to retailers for retail stores throughout the United States. In
September 2002, MerchantWired, LLC discontinued operations.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
Item 4 of the Schedule 14D-9 is hereby amended and supplemented by adding the
following:
(a) SOLICITATION/ RECOMMENDATION
After careful consideration, including a thorough review of the Revised
Offer with the Company's independent financial and legal advisors, the Board of
Directors unanimously determined that the Revised Offer is not in the best
interests of Taubman Centers' shareholders.
ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU
REJECT THE REVISED OFFER AND NOT TENDER YOUR COMMON SHARES PURSUANT TO THE
REVISED OFFER.
A form of letter communicating the Board of Directors' recommendation
to you and a press release relating to the recommendation to reject the Revised
Offer are filed as Exhibits (a)(26) and (a)(27) to this document and are
incorporated herein by reference.
(b) BACKGROUND OF THE TRANSACTION
On January 15, 2003 Simon and Westfield announced that Westfield had
joined the Offer, that the Offer Price was increased to $20.00 per share, that
the expiration date of the Offer was extended until February 14, 2003, and that
unless two-thirds of the outstanding Common Stock were tendered and not
withdrawn prior to midnight on February 14, 2003, Simon and Westfield will
withdraw the Revised Offer and terminate their efforts to acquire the Company.
On January 20, 2003, the Board of Directors met to review the terms of
and consider the Revised Offer with its financial and legal advisors. The Board
of Directors also received and considered updates of recent operational and
financial developments concerning the Company. At such meeting, the Board, after
receiving advice from its legal and financial advisors, unanimously determined
that it would be in the best interests of the Company and its stockholders to
reject the Offeror and Westfield's unsolicited Revised Offer.
(c) REASON FOR THE RECOMMENDATION.
The Taubman Centers Board of Directors, after consultation with its
senior management, legal and financial advisors reached the conclusion that the
Revised Offer is not in the best interest of the Company's shareholders and
offered the recommendation described above, for the following reasons:
(i) The Board's familiarity with the business of the Company,
its financial condition, results of operations and prospects and the
nature of, the prospects for, and the Company's position in, the
industry in which the Company operates, and the Board's belief that,
for the reasons further explained under paragraphs (iii) and (v),
neither the Company's current stock price nor the Revised Offer reflect
the full value of the Company's assets.
(ii) The opinion of Goldman Sachs, the Company's financial
advisor, after reviewing with the Board of Directors many of the
factors referred to herein and other financial criteria used in
assessing an offer, that the Revised Offer is inadequate.
(iii) The Board's belief that a number of the Company's
properties are at early stages in their development cycles and are
expected to generate increasing returns over the next few years. The
Board believes that the Company's current stock price does not reflect
the value of these assets or their growth potential. Moreover, the
Board believes that the Company's organic growth strategy of
concentrating on improving the quality and consistency of its assets,
coupled with selective development and acquisitions and divestitures,
is likely to yield long-term returns to shareholders superior to the
Revised Offer.
(iv) The Board's belief that the Company's recent placement of
a minority investment in non-voting Units at $24 per unit to a
sophisticated real estate investor is indicative of the fact that the
Revised Offer does not reflect adequate value for the Company's common
stock. The Board noted that these Units were issued in connection with
the Company's provision of financing on an unrelated real estate
transaction which did not involve the sale of control of the Company.
(v) The Board's belief that both the inadequacy of the Revised
Offer and the opportunistic manner in which it has been pursued
represent a threat to shareholder value, to the Company's stability and
to the many other constituencies which have an interest in the
Company's success. The Board believes the timing of the Revised Offer
represents an opportunistic attempt by Simon and Westfield to acquire a
collection of upscale regional mall assets that cannot be replicated,
and which are the most productive portfolio of regional malls held by
any public company.
(vi) The fact that Taubman Centers has delivered an 81.6%
total return to shareholders for the five year period ending November
13, 2002 (the date immediately prior to the public announcement of
Simon's initial proposal). During that time period the Company has
outperformed the Morgan Stanley REIT Total Return Index (which returned
21.6%), the S&P 500 Total Return Index (which returned 4.3%), and many
of its competitors (including Simon Property Group, which returned
63.3%). The Taubman Centers properties have the highest average sales
and rents per square foot of any regional mall company. Based on these
facts, the Board believes that the Revised Offer does not reflect the
full value of the Company's assets.
(vii) The Board's belief that Simon's and Westfield's
approaches to managing and developing their properties are inconsistent
with the Company's portfolio of upscale
shopping centers in select high-growth markets and are not likely to
yield the maximum value for the Company's assets.
(viii) The fact that the markets for regional malls are
already highly concentrated in several cities where Simon, Westfield
and the Company compete. If the proposed transaction were to occur,
that concentration could dramatically increase, resulting in decreased
competition among all local shopping centers and causing higher lease
prices for mall tenants, higher ultimate retail prices for consumers,
and lower quality shopping centers in the affected areas. At any time
before or after consummation of the Revised Offer, federal antitrust
authorities, State Attorneys General, or private parties may
investigate the transaction and/or bring legal actions under the
federal or state antitrust laws seeking to enjoin the acquisition of
the Company's Common Shares or to require divestiture of Simon's,
Westfield's or the Company's assets. Accordingly, the Board believes
that there is significant uncertainty as to whether Simon and Westfield
could ultimately consummate a transaction along the lines they have
proposed.
(ix) The Board's belief that Simon's continuing public
relations campaign (which has now been joined by Westfield) aimed at
damaging the Company is hypocritical and the Board's concern about
Simon's misleading statements to the public about its own corporate
governance in its press releases and Form 8-K filed on November 18,
2002. The Board noted the fact that Simon claimed in a press release
that "the Simon family has no veto power or other control mechanism
that could block a sale or merger transaction." In a story published in
The New York Times on December 1, 2002, Simon admitted the untruth of
its statement, calling it "a mistake" and noting that the family does
in fact have the power to block a merger and that to date Simon has not
issued a correction and has maintained this incorrect press release on
its website. In addition, the Board took note of Simon's (and now
Westfield's) repeated willingness to mischaracterize Taubman Centers'
financial performance and to misrepresent the premium they are offering
and Michigan law and David Simon's communications with Robert Taubman.
The Board believes that these misstatements may be indicative of a
larger compliance problem in the Simon organization, which calls into
question both Simon's representations and its ability to consummate a
transaction along the lines it and Westfield have proposed.
(x) The fact that completion of the Revised Offer and
second-step merger will likely be a taxable event to many of the
Company's shareholders, the timing of which will not be in their
individual control. Accordingly, the Board believes that many
shareholders would actually receive less in net proceeds than purported
to be offered by Simon and Westfield, which offer in itself the Board
has determined to be inadequate.
(xi) The fact that the Taubman family and other shareholders,
with combined voting power of over a third of the total voting power of
the Company's capital stock, have indicated that they do not intend to
tender their Common Shares and have taken the firm position that they
are not interested in pursuing a sale transaction. The Board noted that
the two-thirds shareholder vote required for a sale or other
extraordinary transaction has been in the Company's charter since its
initial public offering in 1992. The Revised Offer cannot be completed
absent a Court ruling in litigation brought by Simon seeking to divest
some of the Taubman Center shareholders of their voting rights. Based
on the
advice of counsel, the Board believes that the litigation brought by
Simon to disenfrancise the Series B shareholders is without merit.
(xii) The Board's belief that the unsolicited and hostile
nature of the Revised Offer when coupled with its inability to be
completed, makes it expensive, disruptive, and detrimental to Simon,
Westfield and the Company.
(xiii) The Board's belief, based on the factors set forth in
paragraphs (i) through (xii) above, that the consideration to be paid
in the Revised Offer does not reflect the inherent value of the
Company.
(xiv) The fact that the Revised Offer is highly conditional,
which results in significant uncertainty that the Revised Offer could
or would be consummated. Specifically, according to the Revised Offer
it is subject to the following conditions, among many others:
(1) Minimum Tender Condition. Consummation of the Revised
Offer is conditioned upon there being validly tendered and not
withdrawn prior to the expiration of the Revised Offer such number
of Common Shares that represents, together with Common Shares
owned by the Offeror, Simon, Westfield or any of its subsidiaries,
at least two-thirds (2/3) of the total voting power of the
Company. Voting power of the Company is calculated based upon the
aggregate voting power attributable to the outstanding Common
Shares and the purported voting power attributable to the
outstanding shares of Series B Preferred Stock (assuming exercise
of all then outstanding rights to purchase Common Shares or
partnership units of the Operating Partnership). Accordingly, the
Board believes that this condition will not be satisfied. See
"Legal Matters -- Litigation."
(2) Excess Share Condition. The Company's charter prevents any
person or group from beneficially or constructively owning capital
stock representing more than 8.23% of the total value of the
Company's capital stock (the "Ownership Limit"). As was disclosed
to the Company's shareholders in connection with the Company's
IPO, and numerous times since, the Ownership Limit is intended
both to preserve the Company's status as a REIT and make it more
difficult for any person to acquire control of the Company. The
Company's Board in certain circumstances can increase the
Ownership Limit to 9.9%. Shares owned in excess of the Ownership
Limit are considered "Excess Shares" under the Company's Restated
Articles of Incorporation and are transferred to a designated
agent of the Company (the "Excess Share Provision"). The
designated agent upon delivery of the shares must immediately sell
such shares and donate any proceeds over the price the acquiror
paid for the shares to charity. Consummation of the Revised Offer
is conditioned upon the Offeror being satisfied, in its sole
discretion, that the Offeror may purchase all of the Shares
tendered pursuant to the Revised Offer without triggering the
Excess Share Provision. The Excess Share Provision may only be
waived by the affirmative vote of at least two-thirds (2/3) of the
total voting power of the Company. Accordingly, this condition may
only be met if
Simon is successful in its litigation which the Company believes
is without merit. Therefore, the Board believes that this
condition will not be satisfied.
(3) Control Share Condition. Consummation of the Revised Offer
is conditioned upon full voting rights for all Common Shares to be
acquired by Offeror pursuant to the Revised Offer having been
approved by the Company's shareholders under Chapter 7B of the
MBCA (the "Michigan Control Share Acquisitions Act") or the
Offeror being satisfied, in its sole discretion, that the Michigan
Control Share Acquisitions Act is invalid or otherwise
inapplicable to the Shares to be acquired by the Offeror in the
Revised Offer. On December 10, 2002 the Board of Directors opted
out of the Michigan Control Share Acquisitions Act. "See Legal
Matters -- Michigan Control Share Acquisitions Act."
(4) Business Combination Condition. Consummation of the
Revised Offer is conditioned upon the Offeror being satisfied, in
its sole discretion, that Chapter 7A of the MBCA (the "Michigan
Business Combination Act") will not prohibit for any period of
time, or impose any shareholder approval with respect to, its
proposed back end merger or any other "Business Combination" (as
defined in the Michigan Business Combination Act) involving the
Company and the Offeror or any other affiliate of Simon or
Westfield. While the Michigan Business Combination Act does not
currently apply to the Company, the Company may elect to be
governed by the Michigan Business Combination Act at any time, in
which case this condition would not be met.
(5) No Material Adverse Change Condition. Consummation of the
Revised Offer is conditioned upon the Offeror not becoming aware
of any change that has or will have occurred (or any development
that has or will have occurred involving prospective changes) in
the business, assets, liabilities, condition (financial or
otherwise), prospects or results of operations of the Company or
any of its subsidiaries that has, or could reasonably be expected
to have, in the sole discretion of the Offeror, a material adverse
effect on the Company or, assuming consummation of the Revised
Offer or its proposed back end merger, on the Offeror, Simon,
Westfield or any other affiliate of Simon or Westfield.
(6) Competing Offer Condition. Consummation of the Revised
Offer is conditioned upon a tender or exchange offer for any
Common Shares not having been made or publicly proposed to be made
by any other person (including the Company or any of its
subsidiaries or affiliates)
(7) Numerous Other Conditions. Consummation of the Revised
Offer is also subject to other conditions, several of which are
unlikely to be satisfied. Notwithstanding the Company's regular
practice of increasing its dividend (including its recent
announcement of the regular annual increase on December 10, 2002),
the offer is conditioned on the Company not increasing its
dividend. Similarly, the Revised Offer is conditioned on their
being no change to the Company's by-laws regardless of its effect
on the Offeror. While Simon
filed an amendment to the Offer stating that it would not assert
these condition with respect to the recent dividend increase and
by-law amendments, it has not waived the condition with respect to
any future dividend increases or by-law amendments. The Revised
Offer is also contingent on there being no issuance of stock or
options, no changes to employment agreements, no commencement of
war or armed hostilities or other national or international crisis
involving the United States, and to many other conditions.
In light of the above factors, the Taubman Centers Board
determined that the Revised Offer is not in the best interests of Taubman
Centers and Taubman Centers' shareholders. ACCORDINGLY, THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT TAUBMAN CENTERS' SHAREHOLDERS REJECT THE REVISED
OFFER AND NOT TENDER THEIR SHARES PURSUANT TO THE REVISED OFFER.
In addition, in arriving at their recommendation, the
directors of the Company were aware of the interests of certain officers and
directors of the Company as described under "Interests of Certain Persons." The
directors of the Company were also aware that the Taubman Family's voting power
is derived primarily from its ownership of Series B Preferred Stock and that
Simon has challenged the issuance of the Series B Preferred Stock and is seeking
to disenfranchise the Series B shareholders; however, the Board believes this
litigation to be without merit.
In making its determination that the Revised Offer is not in
the best interests of Taubman Centers and Taubman Centers' shareholders, the
Board took into account that the realization of the Company's anticipated future
results is not assured, and that there is a risk that the Company's plans, like
the plans of any business, will not be successfully completed. If the Company
remains independent, its shareholders will continue to bear this risk.
The foregoing discussion of the information and factors
considered by the Taubman Centers Board is not intended to be exhaustive but
addresses all of the material information and factors considered by the Taubman
Centers Board in its consideration of the Revised Offer. In view of the variety
of factors and the amount of information considered, the Taubman Centers Board
did not find it practicable to provide specific assessments of, quantify or
otherwise assign any relative weights to, the specific factors considered in
determining to recommend that shareholders reject the Revised Offer. Such
determination was made after consideration of all the factors taken as a whole.
In addition, individual members of the Taubman Centers Board may have given
differing weights to different factors. Throughout its deliberations, the
Taubman Centers Board received the advice of Goldman Sachs, and of outside legal
advisors, who were retained to advise the Taubman Centers Board in connection
with the Offer and the Revised Offer.
(d) INTENT TO TENDER
To the best of Taubman Centers' knowledge, none of Taubman
Centers' executive officers or directors currently intend to tender Common
Shares over which he or she has sole dispositive power to Simon pursuant to the
Revised Offer.
ITEM 9. EXHIBITS
Item 9 is hereby amended and supplemented by adding thereto the following:
EXHIBIT NO. DESCRIPTION
__________ ___________
(a)(26) Letter to Shareholders, dated January 21, 2003
(a)(27) Press release issued by Taubman Centers on
January 21, 2003
(a)(28) Website Presentation: Board Rejection of Revised
Simon Offer
SIGNATURE
After due inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.
Dated: January 20, 2003 Taubman Centers, Inc.
By: /s/ Robert S. Taubman
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Robert S. Taubman
Chairman of the Board, President and
Chief Executive Officer
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
__________ ___________
(a)(26) Letter to Shareholders, dated January 21, 2003
(a)(27) Press release issued by Taubman Centers, Inc.
on January 21, 2003
(a)(28) Website Presentation: Board Rejection of Revised
Simon Offer