Item 8.01. OTHER EVENTS.
As previously announced, on November 14, 2020, Taubman Centers, Inc., a Michigan
corporation ("TCO" or the "Company"), The Taubman Realty Group Limited
Partnership, a Delaware limited partnership (the "Taubman Operating Partnership"
and, together with TCO, the "Taubman Parties"), Simon Property Group, Inc., a
Delaware corporation ("Simon"), Simon Property Group, L.P., a Delaware limited
partnership (the "Simon Operating Partnership"), Silver Merger Sub 1, LLC, a
Delaware limited liability company and wholly owned subsidiary of the Simon
Operating Partnership ("Merger Sub 1"), and Silver Merger Sub 2, LLC, a Delaware
limited liability company and wholly owned subsidiary of Merger Sub 1 ("Merger
Sub 2" and, together with Simon, the Simon Operating Partnership and Merger Sub
1, the "Simon Parties"), entered into an Amended and Restated Agreement and Plan
of Merger (the "merger agreement"), amending and restating the Agreement and
Plan of Merger by and among the Taubman Parties and the Simon Parties, dated
February 9, 2020 (the "original merger agreement"). Pursuant to the merger
agreement, subject to the satisfaction or waiver of certain conditions, Merger
Sub 2 will be merged with and into the Taubman Operating Partnership (the
"Partnership Merger") and TCO will be merged with and into Merger Sub 1 (the
"REIT Merger" and, together with the Partnership Merger, the "Mergers"). In
connection with the merger agreement, on December 4, 2020, TCO filed a
definitive proxy statement (the "Proxy Statement") with the U.S. Securities and
Exchange Commission (the "SEC").
In connection with the original merger agreement and/or the merger agreement and
the transactions contemplated thereby, two purported class action complaints are
presently pending on behalf of TCO shareholders against the Taubman Parties and
Simon Parties (in the case of one of the complaints) and members of TCO's board
of directors in the United States District Court for the District of Delaware
and the Circuit Court for the 6th Judicial Circuit, Oakland County, of the State
of Michigan. The two complaints are captioned as follows: Post v. Taubman
Centers, Inc., et al., No. 1:20-cv-00685-UNA (D. Del.) (the "Post Action") and
Elstein v. Taubman Centers, Inc., et al., No. 2020-185008-CB (Oakland County
Cir. Ct.) (the "Elstein Action" and, together with the Post Action, the
"Shareholder Actions"). The Post Action alleges that the defendants named
therein violated Sections 14(a) and 20(a) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or were legally responsible for such
alleged violations, because the proxy statement filed by TCO on May 29, 2020
allegedly omits or misstates certain material information. The Elstein Action
alleges that the defendants named therein breached their fiduciary duties to the
putative class and TCO under Michigan law, including their duty to disclose all
material facts in the Proxy Statement. The Elstein action additionally asserts
derivative claims for breach of fiduciary duty, including breach of a fiduciary
obligation to cause TCO to completely disclose all material facts in the Proxy
Statement so that plaintiff and TCO's other public shareholders can make an
informed decision whether to vote their shares in favor of the merger. A copy of
the complaint in the Elstein action (the "Elstein Complaint") is attached hereto
as Exhibit 99.1. The Shareholder Actions seek, among other things, injunctive
relief preventing the consummation of the Mergers, unspecified damages and
attorneys' fees. Similar, earlier shareholder actions filed in connection with
the original merger agreement were voluntarily dismissed.
TCO believes that no supplemental disclosures are required under applicable
law. However, TCO is making certain disclosures below that supplement and
revise those contained in the Proxy Statement. TCO denies that any of the
defendants have committed or assisted others in committing any violations of
law. Nothing in these supplemental disclosures shall be deemed an admission of
the legal necessity or materiality under applicable laws of any of the
supplemental disclosures set forth herein.
The following supplemental disclosures should be read in conjunction with the
Proxy Statement, which should be read in its entirety. To the extent that
information herein differs from or updates information contained in the Proxy
Statement, the information contained herein supersedes the information contained
in the Proxy Statement. Defined terms used but not defined herein have the
meanings set forth in the Proxy Statement. For clarity, new text within
restated paragraphs from the Proxy Statement are highlighted with bold,
underlined text.
Supplemental Disclosures to the Proxy Statement Related to Shareholder Actions
The disclosure in the section entitled "Background of the Transaction" under the
heading "Special Factors," beginning on page 20 of the Proxy Statement is hereby
amended by:
Amending and restating the final paragraph beginning on page 35 as follows:
During the go-shop period, Lazard contacted 18 potential counterparties,
consisting of 4 strategic parties and 14 financial sponsor parties. The
potential counterparties were selected based on, among other reasons, the
perceived strategic fit of Taubman for such parties, the potential ability of
such parties to consummate an acquisition involving a company the size of
Taubman, and the perceived interest level of such parties in pursuing a
potential acquisition of Taubman. None of these parties entered into a
confidentiality agreement with Taubman or received non-public due diligence
information about Taubman. In addition, none of these parties made an
acquisition proposal with respect to Taubman. During the go-shop period, the
Special Committee regularly held meetings with representatives of Lazard and
Kirkland to discuss updates regarding the go-shop process.
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Amending and restating the fourth paragraph on page 37 as follows:
On November 9, 2020, Paul Weiss sent a draft amendment to the original merger
agreement to Kirkland and Wachtell Lipton. From November 9, 2020 until the
execution of the merger agreement on November 14, 2020, the parties and their
respective legal advisors exchanged numerous drafts of, and engaged in multiple
discussions and negotiations (including discussions and negotiations involving
Judge Rosen) concerning the terms of, the potential amendments to the original
merger agreement. These discussions were focused on, among other things, the
scope of the interim operating covenants, the conditions to closing and other
provisions related to the conditionality of the transactions contemplated by the
original merger agreement. The parties also discussed changing the governing law
of the merger agreement to the laws of the State of Delaware and the exclusive
forum for disputes related to the merger agreement to the Delaware Court of
Chancery. During this period of time the parties also negotiated the potential
amendments to the original JV agreement and the settlement agreement. The terms
of the voting agreement are identical to those of the original voting agreement.
From November 9, 2020 until the execution of the merger agreement on November
14, 2020, Kirkland engaged in numerous conversations with members of the Special
Committee regarding the terms of the potential amendments to the original merger
agreement.
The disclosure in the section entitled "Opinion of Financial Advisor to the
Special Committee" under the heading "Special Factors," beginning on page 46 of
the Proxy Statement is hereby amended by:
Amending and restating the second paragraph under the heading "Miscellaneous" on
page 53 as follows:
Lazard has not been engaged to provide financial advisory services to Simon or
Taubman or an entity known by Lazard to be an affiliate of Simon or Taubman
during the last two years.
The disclosure in the section entitled "Certain Unaudited Prospective Financial
Information" under the heading "Special Factors," beginning on page 63 of the
Proxy Statement is hereby amended by:
Inserting a new footnote (9) to the table at the top of page 66 that reads as
follows:
(9) Certain line items calculated in the November 2020 Projections were not
calculated for the purposes of the January 2020 Projections.
The disclosure in the section entitled "Changes to the Original Merger Agreement
Pursuant to the Merger Agreement" under the heading "The Merger Agreement,"
beginning on page 88 of the Proxy Statement is hereby amended by:
Amending and restating the first paragraph under the heading "Changes to the
Original Merger Agreement Pursuant to the Merger Agreement" as follows:
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The original merger agreement was amended and restated pursuant to the merger
agreement to, among other things, (i) reduce the common stock merger
consideration to $43.00 from $52.50 in cash, in each case without interest and
less any required withholding taxes, (ii) change the consideration that a
minority partner of the Taubman operating partnership immediately prior to the
effective time of the Partnership Merger may receive in the Partnership Merger
into the right to receive, for each Taubman OP unit held, at the election of
such minority partner, the common stock merger consideration or 0.5703 new Simon
OP units instead of an election between the common stock merger consideration or
0.3814 new Simon OP units as provided in the original merger agreement
(reflecting the revised purchase price and Simon's stock price at the time the
merger agreement was signed), (iii) narrow the conditions to the closing,
including eliminating the condition that Taubman not have suffered a material
adverse effect condition, and, with respect to Taubman and the Taubman operating
partnership's compliance with their obligations under the merger agreement and
with respect to the accuracy of Taubman and the Taubman operating partnership's
representations and warranties such that any failure by Taubman, the Taubman
operating partnership or any of their respective subsidiaries to comply with
their obligations under the merger agreement or any inaccuracy of a
representation or warranty of Taubman or the Taubman operating partnership that
relates to matters that, as of the date of the merger agreement, were known by
certain executive officers of Simon, had been alleged by the Simon parties in
the merger litigation, or had been (A) included in Taubman's SEC filings as of
November 14, 2020 or (B) subject to certain exceptions, included in any
materials or documents provided by Taubman or the Taubman operating partnership
to the Simon parties or their representatives, are not to be taken into account
for the purposes of determining whether the conditions to the Simon parties'
obligations to consummate the transactions contemplated by the merger agreement
have been satisfied, (iv) provide that Taubman's obligation to use commercially
reasonable efforts to operate its business in the ordinary course does not
prohibit Taubman from adopting certain measures in response to the COVID-19
pandemic, (v) prohibit Taubman and its subsidiaries from declaring any dividends
or other distributions until the consummation of the mergers without the prior
written consent of Simon, except for the declaration and payment by Taubman of
dividends (A) required to be distributed pursuant to the limited partnership
agreement of the Taubman operating partnership or to maintain Taubman's status
as a REIT and (B) pursuant to the terms of the Taubman Series J Preferred Stock
and the Taubman Series K Preferred Stock, (vi) provide that both Taubman's
obligation to use commercially reasonable efforts to operate its business in the
ordinary course and certain specific operating restrictions limiting Taubman and
its subsidiaries' activities will terminate if the Transactions contemplated by
the merger agreement have not been consummated within six business days after
the date on which the Taubman shareholder approval has been obtained because of
the Simon parties' willful breach of the merger agreement (such willful breach
to include failure by the Simon parties to consummate the Transactions within
one business day of the conditions to consummating the Transactions being
satisfied), (vii) provide that if, at any time prior to the effective time of
the REIT Merger, there is a claim brought by or against Taubman to enforce the
obligations of Simon to consummate the Transactions, or for money damages for
Simon's failure to consummate the Transactions, or to excuse Simon's obligation
to consummate the Transactions, or to assert Simon's right to terminate the
merger agreement, the consideration to be paid in connection with the
Transactions will be deemed to be $52.50 in cash, without interest and less any
required withholding taxes, in the event that Simon has brought or pursued such
claim, failed to consummate the Transactions in breach of the merger agreement
or to comply with the merger agreement in such a manner as to frustrate a
condition to closing of the merger agreement that forms a basis for a claim by
Simon that it is not obligated to consummate the Transactions, or sought to
terminate the merger agreement, in each case other than in good faith and (viii)
change the governing law of the merger agreement from the laws of the State of
Michigan to the laws of the State of Delaware (except to the extent that the
corporate laws of the State of Michigan are mandatorily applicable) and change
the exclusive forum for disputes related to the merger agreement to the Delaware
Court of Chancery.
The disclosure in the section entitled "Compensation of the Special Committee"
under the heading "Interests of Taubman's Directors and Executive Officers in
the Transactions," beginning on page 68 of the Proxy Statement is hereby amended
by:
Amending and restating the paragraph under the heading "Compensation of the
Special Committee" on page 74 in its entirety as follows:
The Special Committee consists of four independent members of the Taubman Board,
Mayree C. Clark, Michael J. Embler, Cia Buckley Marakovits and Myron Ullman III.
It is expected that each member of the Special Committee will receive
compensation of $125,000 for such member's service on the Special Committee.
These fees are not dependent on the closing of the Transactions or on the
Special Committee's or the Taubman Board's approval of, or recommendations with
respect to, the Transactions.
Item 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits
Exhibit No. Description of Exhibit
99.1 Elstein Complaint
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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FORWARD-LOOKING STATEMENTS
This Current Report on Form 8-K may contain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. These statements
reflect management's current views with respect to future events and financial
performance. Forward-looking statements can be identified by words such as
"will", "may", "could", "expect", "anticipate", "believes", "intends", "should",
"plans", "estimates", "approximate", "guidance" and similar expressions in this
Current Report on Form 8-K that predict or indicate future events and trends and
that do not report historical matters. The forward-looking statements included
in this Current Report on Form 8-K are made as of the date hereof. Except as
required by law, the Company assumes no obligation to update these
forward-looking statements, even if new information becomes available in the
future. Actual results may differ materially from those expected because of
various risks and uncertainties, including the occurrence of any event, change
or other circumstances that could give rise to the termination of the amended
and restated merger agreement? the inability to complete the proposed
transaction due to the failure to obtain shareholder approval for the proposed
transaction or the failure to satisfy other conditions to completion of the
proposed merger? risks related to disruption of management's attention from the
Company's ongoing business operations due to the proposed transaction? the
effect of the announcement of the proposed transaction on the Company's
relationships with its tenants, operating results and business generally;
general economic conditions, and other factors. Such factors include, but are
not limited to: the COVID-19 pandemic and related challenges, risks and
uncertainties which have had, and may continue to have, direct and indirect
adverse impacts on the general economy, mall environment, tenants, customers,
and employees, as well as mall and tenant operations (including the ability to
remain open) and operating procedures, occupancy, anchor and mall tenant sales,
sales-based rent, rent collection, leasing and negotiated rents, mall
development and redevelopment activities and the fair value of assets
(increasing the likelihood of future impairment charges); future economic
performance, including stabilization and recovery from the impact of the
COVID-19 pandemic; savings due to cost-cutting measures; payments of dividends
and the sufficiency of cash to meet operational needs; changes in market rental
rates; unscheduled closings or bankruptcies of tenants; relationships with
anchor tenants; trends in the mall industry; challenges with department stores;
changes in consumer shopping behavior, including accelerated trends resulting
from the COVID-19 pandemic; the liquidity of real estate investments; changes in
market rental rates; unscheduled closings or bankruptcies of tenants;
relationships with anchor tenants; trends in the retail industry; challenges
with department stores; changes in consumer shopping behavior; the liquidity of
real estate investments; the Company's ability to comply with debt covenants;
the availability and terms of financings; changes in market rates of interest
and foreign exchange rates for foreign currencies; changes in value of
investments in foreign entities; the ability to hedge interest rate and currency
risk; risks related to acquiring, developing, expanding, leasing and managing
properties; competitors gaining economies of scale through M&A and consolidation
activity; changes in value of investments in foreign entities; risks related to
joint venture properties; insurance costs and coverage; security breaches that
could impact the Company's information technology, infrastructure or personal
data; costs associated with response to technology breaches; the loss of key
management personnel; shareholder activism costs and related diversion of
management time; terrorist activities; maintaining the Company's status as a
real estate investment trust; changes in the laws of states, localities, and
foreign jurisdictions that may increase taxes on the Company's operations; and
changes in global, national, regional and/or local economic and geopolitical
climates.
You should review the Company's filings with the Securities and Exchange
Commission, including "Risk Factors" in its most recent Annual Report on Form
10-K and subsequent quarterly reports, for a discussion of such risks and
uncertainties.
IMPORTANT INFORMATION ABOUT THE TRANSACTION AND WHERE TO FIND IT
In connection with the proposed transaction between the Company and Simon, the
Company filed with the U.S. Securities and Exchange Commission (the "SEC") a
definitive Proxy Statement of the Company (the "Proxy Statement") on December 4,
2020 and commenced mailing the Proxy Statement to its shareholders. This Current
Report on Form 8-K is not intended to and does not constitute the solicitation
of any proxy, vote or approval. INVESTORS AND SECURITY HOLDERS OF THE COMPANY
ARE URGED TO READ THE PROXY STATEMENT AND OTHER RELEVANT DOCUMENTS FILED OR TO
BE FILED WITH THE SEC CAREFULLY AS THEY BECOME AVAILABLE BECAUSE THEY CONTAIN
IMPORTANT INFORMATION ABOUT THE COMPANY, SIMON, THE PROPOSED TRANSACTION AND
RELATED MATTERS. Investors and security holders are able to obtain free copies
of the Proxy Statement and other documents filed with the SEC by the Company
through the website maintained by the SEC at www.sec.gov. In addition, investors
and security holders are able to obtain free copies of the documents filed with
the SEC by the Company in the Investor Relations section of the Company's
website at http://investors.taubman.com/investors or by contacting Erik Wright,
Manager, Investor Relations at ewright@taubman.com or (248) 258-7390.
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PARTICIPANTS IN THE SOLICITATION
The Company and certain of its directors, executive officers and employees may
be considered participants in the solicitation of proxies in connection with the
solicitation of proxies from shareholders of the Company in favor of the
proposed transaction. Information regarding the persons who may, under the rules
of the SEC, be deemed participants in the solicitation of the shareholders of
the Company in connection with the proposed transaction, including a description
of their respective direct or indirect interests, by security holdings or
otherwise, is included in the Proxy Statement described above filed with the
SEC. Additional information regarding the Company's directors and executive
officers is also included in the Company's proxy statement for its 2020 Annual
Meeting of Shareholders, which was filed with the SEC on July 2, 2020, and its
Annual Report on Form 10-K for the year ended December 31, 2019, which was filed
with the SEC on February 27, 2020. These documents are available free of charge
as described above.
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