Simons Hostile Tender for Taubman Harvard Case Solution & Analysis

Strategic aspects of Transaction:

David Simon is after this transaction due to following reasons:

  1. The malls owned by Taubman Centre Inc. are very attractive due to the availability of modern facilities in these malls.
  2. The average square foot sale of $ 313 is considered to be one of the highest revenue per square foot earned in the industry.
  3. The acquisitions done by Simon’s company in the past were successful due to which it considers its ability to get the integration successfully.
  4. The demand for the organization’s property is immense.
  5. The organization is currently undervalued and thus, there is an inherent ability in its properties to provide more value.
  6. Moreover, the removal of Taubman family control will allow the Simon’s Group to make the organization more profitable by removing any defect in its corporate structure.
  7. It will further strengthen the position of Simon Property Group in North America.

So taking into account of all these factors, it can be concluded that the transaction does indeed make strategic sense for David Simon.

Therefore if I were in the place Simon, I would increase my bid for the Taubman Centre Inc.

Recommendation:

According to the above analysis, the bid price for the company should increase, as the value of shares given by the CAPM Model amounts to $ 40. However, the estimated value does not take account of other important factors such as vacancy rates, rental rate and other expenditures. Hence, the important factors pertaining to the estimation of fair value should be considered before proceeding with the bid decision...................................

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