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(Reuters) - Macerich Co, the third-largest U.S. shopping mall owner, rejected a $14.39 billion unsolicited offer from larger rival Simon Property Group Inc, saying the proposal "substantially undervalues" the company.
Macerich also said on Tuesday it adopted a poison pill, or a shareholder rights plan, with a 10 percent trigger and changed its board structure to thwart a hostile takeover.
Shares of Macerich, which received the $91 per share offer earlier this month, fell as much as 5 percent to $90.29 in early trading. Including debt, the offer was valued at $22.4 billion.
"Macerich's rejection is based on a rosy view of its future prospects," Simon Property Chief Executive David Simon said in a statement, calling the rejection an "extreme, scorched-earth response".
Macerich's directors will now be divided into three classes and their term will be three years, the company said, adding that it would review this structure in 2016.
Macerich is incorporated in Maryland, which allows a company's board to take steps to ward off a hostile takeover without having to seek shareholder approval.
The company said it rejected the offer partly due to antitrust concerns and its inability to evaluate Simon Property's "claims regarding its margins."
"Simon's next step is likely to be to raise its offer," Cowen & Company analyst James Sullivan wrote in a note.
Macerich has been selling off underperforming malls to focus on redeveloping its more lucrative malls. It plans to spend $400 million-$500 million annually on such actions over the next five years.
The deal would have helped Simon Property boost its portfolio of high-end malls, which are performing better than those with mid-range brands, and expand in California and other western states.
High-end malls generally house expensive brands such as Apple Inc and Macy Inc's Bloomingdale's.
Macerich said its rights plan, which came into effect immediately, would expire on the date of its 2016 annual investor meeting.
Shareholders of record as on March 30 will have the right to buy one preferred share for each common share held.
Deutsche Bank Securities Inc, Goldman Sachs & Co and JP Morgan Securities LLC are Macerich's financial advisers, while Kirkland & Ellis LLP, Goodwin Procter LLP and Venable LLP are its legal advisers.
Macerich's shares closed down 3.5 percent at $91.60 on the New York Stock Exchange, while Simon Property fell 0.5 percent to $186.13.
Additional reporting by Rohit T.K. and Eileen Soreng in Bengaluru; Editing by Kirti Pandey