DETROIT -- Simon Property Group Inc. on Wednesday withdrew its hostile $1.7 billion takeover bid for rival shopping mall developer Taubman Centers Inc.
The announcement by Indianapolis-based Simon and its partner Westfield America Inc. came a day after Gov. Jennifer Granholm signed legislation aimed at helping Bloomfield Hills, Mich.-based Taubman fend off the takeover effort.
The bill changes Michigan's takeover law to say that shareholders acting together do not violate the law, but it would be against the law for a group to act together with the purpose of acquiring additional shares.
Taubman family members and friends wanted to be able to vote any of their 33.6 percent controlling block without first receiving approval from the company's other public shareholders. A takeover needs a two-thirds vote in favor of the bid.
"We're pleased that Simon Property and Westfield America have withdrawn their tender offer," Taubman spokesman Jeremy Jacobs said in a statement. "We will continue to run the business for the benefit of all shareholders."
Simon, North America's largest shopping mall owner and owner of the Forum Shops at Caesars in Las Vegas, opposed the legislation, saying it would remove shareholders' rights and make other Michigan companies more open to hostile takeovers.
Simon spokeswoman Shelly Doran said Wednesday the company would have no further comment. Simon announced last week that it was extending its $20 per share cash offer until Oct. 31.
Simon began the takeover effort last November. Taubman is a much smaller rival that owns high-end mall properties Simon wants for its portfolio.
Taubman's properties include 30 shopping centers in 13 states. Its former chairman, A. Alfred Taubman, 79, recently served a one-year federal sentence for fixing prices as chief of the auction house Sotheby's Holdings Inc.
Westfield, a shopping mall subsidiary of an Australian company, joined Simon as a takeover partner after Simon's initial offers were rebuffed.
Simon filed a federal lawsuit against Taubman last December, saying the company breached its fiduciary duty by not considering Simon's last offer and allowing the Taubman family to block the deal.
U.S. District Judge Victoria Roberts sided with Simon earlier this year, saying Taubman's voting arrangement violated Michigan's Control Share Acquisitions Act. Taubman appealed the ruling, but the bill signed on Tuesday changed the act to put Taubman in compliance.
In trading on the New York Stock Exchange, Taubman shares were down 30 cents to close at $19.90 while Simon shares rose 7 cents to close at $45.28.
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