Board of Directors of General Growth Sued by Shareholder
A shareholder is suing the board of directors of General Growth Properties Inc., a Chicago-based publicly traded real estate investment trust, for alleged breach of fiduciary duty. According to BusinessWeek, Chairman John Bucksbaum, along with the six other members of the board, is being brought to court for rejecting a $10 billion buyout offer from Simon Property Group Inc. General Growth which is now bankrupt.
Simon Properties, a rival mall operator from Indianapolis, publically offered to buy the beleaguered Chicago outfit for about $9 a share plus $6 in cash, a deal which would amount to over $10 billion. However, the board of General Growth rejected the offer saying that the price was too low and instead opted to wait for other potential buyers to make a bid.
The lawsuit, brought by James Young on behalf of the stockholders of General Growth, seeks to bar the company from entering into any contract that harms the shareholders or the company itself. Furthermore, the suit would stop the board from entering into a deal that would make it costly or difficult for another purchaser to acquire the company.
Blackstone Group LP, which is the world’s largest private equity firm, is rumored to be in discussions with Simon in order to join it in its bid. This news caused General Growth’s shares to rise 5 cents. However, further details regarding the Blackstone-Simon deal have not yet been made public as the talks are still in their preliminary phases.
According to Seeking Alpha, Simon Property is the largest mall operator in the U.S. while General Growth is the second largest and most successful operator in the country. However, General Growth has been the only real estate investment trust to fail, likely due to the recent downturn in the real estate market.
Monheit is the managing lawyer at Monheit Law, outside Philadelphia, Pennsylvania. He has practiced law since 1989. Michael Monheit was the managing attorney of the law offices of Herbert Monheit — now Silverman and Fodera — a firm founded by... Michael Monheit→
