The takeover battle of the year ended with the Taubman family victorious. But how did shareholders fare? CEO Robert Taubman insists that they won, too, even if analysts criticized the family for putting its interests before its investors in rejecting a takeover bid by Simon Property Group and Westfield America. Taubman promises that investors will benefit from Taubman Centers' plans to open at least one new project a year and maintain historic growth rates of 8-10 percent a year.
What's more, he says, anyone who questions the firm's fairness should check the Institutional Shareholder Services corporate governance rankings. As of October, Taubman was in the top sixth percentile of its peers on the Russell 3000. “It is unlikely that someone would challenge a governance structure that is so inherently fair,” he says. The quotient rates companies on such qualities as board issues, takeover defenses and executive compensation.
Taubman Centers was saved when the Michigan legislature approved a law making the family's B-class common shares legal, giving them the votes they needed to veto the proposed takeover. But the battle wasn't officially over until Simon missed its deadline for nominating an alternate slate of board members for election at Taubman's annual meeting. Some analysts had predicted Simon might try to gain control that way. But it wasn't prepared to take the fight that far.
Is Taubman worried Simon might try again, or that another REIT may launch takeover talks, if Taubman stock falters? “I can't speculate on what may happen,” he says. Simon has withdrawn with prejudice, which means they can't sue over the same issue again, he says. “Under our charter it takes a two-thirds vote to sell the company. If our family owns a third then it's unlikely there would be a third party that would challenge that vote.”
Taubman says the legal bill was $30 million, but the money bought more than just a win in the courtroom. “There was a spotlight shone on our company that showed how great and undervalued it was,” he says. “Despite having to deal with this expensive distraction, we created $450 million worth of value over the year-long process.”