reuters' update:
UPDATE 1-General Growth wants Simon to raise bid -source
Thu May 6, 2010 12:02pm EDTStocks
General Growth Properties, Inc.
GGP.N
$16.15
-0.42-2.53%
9:51am EST
Simon Property Group, Inc.
SPG.N
$85.61
-2.87-3.24%
9:53am EST
Brookfield Asset Management Inc.
BAMa.TO
$25.10
-0.06-0.24%
9:41am EST
* GGP asked Simon for better price; may make trust offer
* GGP, Simon working on deal documents to be ready to go
* GGP board to weigh whether to postpone Friday hearing
* GGP shares off 2.3 pct, Simon down 3.4 pct (Rewrites throughout; adds details, background, share price, bylines)
By Paritosh Bansal and Ilaina Jonas
NEW YORK, May 6 (Reuters) - General Growth Properties Inc (GGP.N) has asked rival mall owner Simon Property Group Inc(SPG.N) to raise its $5.8 billion bid, a source familiar with the situation said.
General Growth's board is set to meet later on Thursday to weigh whether to postpone a bankruptcy court hearing in light of competing offers from Simon and investors led by Brookfield Asset Management Inc (BAMa.TO). The source added that nothing had been decided and talks continue with both parties.
Simon has offered to pay $18.25 per share for General Growth. It would also also pay holders of $7 billion in General Growth unsecured debt in cash and assume about $18 billion in mortgages and other property-level debt.
General Growth has asked Simon to come up with a higher price, which remains a 'big issue', the source said, adding that could be part of the board's deliberations if Simon did so.
The two sides have also had a meeting on antitrust issues, where Simon came up with a proposal to allay concerns around merging the two largest U.S. mall owners, the source said.
Simon rejected a counterproposal, but General Growth may now come back with a new counteroffer on antitrust issues, the source said.
The two sides have also been working on putting together merger documents so that they are ready to go should they reach a deal, the source said.
General Growth and Simon representatives were not immediately available for comment. The source is not named because the discussions are not public.
Brookfield, Fairholme Capital Management and Pershing Square Capital have offered to make a $6.55 billion equity investment and $2 billion capital backstop to help General Growth exit bankruptcy protection. In return, they will get warrants worth several hundred million dollars.
At Friday's hearing, General Growth would ask the bankruptcy judge to approve the Brookfield-led offer as a "stalking horse" bid, which would set a floor for other suitors.
The Brookfield commitment, however, expires on May 13, which is seen as the real deadline for General Growth to decide which way to go, the source said.
General Growth's shares were off 2.3 percent to $16.19 in noon trading, while Simon shares were down 3.4 percent to $85.50, both on the New York Stock Exchange. (Reporting by Paritosh Bansal and Ilaina Jonas, editing by Tim Dobbyn)
