$3.6 billion deal to buy 26 shopping centers falls apart amidst pandemic

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MILLBURN, NEW JERSEY A view of the Short Hills Mall. (Photo by Elsa/Getty Images)

NEW YORK - The nation's biggest mall owner is backing out of a $3.6 billion deal to buy a major rival as the coronavirus pandemic shakes the retail economy.

It is the second major retail deal signed just before the pandemic began to spread in the U.S. that has crumbled. Last month, a deal to sell Victoria’s Secret to a private equity group fell apart.

Simon Property Group said it would buy Taubman Centers in early February, just weeks before the CDC said a California patient was being treated for coronavirus, the first known case in the U.S.

The plunge in sales for retailers since then has been unprecedented. J.C. Penney, Neiman Marcus and J.Crew, have all filed for bankruptcy protection this year. 

On Wednesday, shares of any retail chain with stores in malls plummeted as well. Kolh's, Macy's, The Gap and Abercrombie & Fitch all slumped sharply. 

As many as 25,000 stores are expected to close this year, more than double last year's count, according to Coresight Research, which tracks store openings and closings. 

Simon said Taubman's properties, which have high-end stores and are in or near big cities, "disproportionately" affected its business due to the COVID-19 pandemic. 

Simon owns or has a stake in 204 properties in the U.S. as of last year. Taubman Centers owns, manages or leases 26 shopping centers in the U.S. and Asia, including The Mall at Short Hills in New Jersey, and Waterside Shops in Naples, Florida. 

Taubman Centers Inc. did not immediately respond to a request for comment Wednesday morning.