The Rouse Co. of Columbia, which helped change the face of American development, agreed yesterday to sell itself to a Chicago mall operator in a deal valued at $12.6 billion.
The agreement promises an abrupt end to a distinguished corporate history begun 65 years ago by James W. Rouse, the visionary developer.
Rouse persuaded a nation to love malls, converted thousands of acres of raw Howard County farmland into the innovative city of Columbia, and helped revitalize urban cores across America, including Baltimore's Inner Harbor.
General Growth Properties Inc. was so impressed by the quality of the company's malls and other real estate holdings that it offered 25 percent more to Rouse shareholders than the stock's all-time high of $54 a share.
It has agreed to pay $7.2 billion in cash and assume $5.4 billion of existing debt, in a swiftly negotiated deal that must be approved by Rouse shareholders.
Analysts say it's a huge price and is great news for the company's investors. Rouse's stock soared more than 30 percent yesterday to $66.65 - nearly reaching the $67.50-a-share price promised by the buyer.
But the deal came as a shock and disappointment to local leaders, who are sure it will be a net loss for a metro area that has benefited from Rouse's image, innovation and philanthropy. Baltimore and its suburbs have seen a steady outward flow of headquarters as major companies have been acquired by larger corporations based elsewhere.
"I hate to lose them because it makes us more and more a branch-office town," said Aris Melissaratos, Maryland's secretary of business and economic development, who had no inkling that Rouse was for sale.
"And there's a price you pay for that in terms of civic leadership and the ability of the corporate world to support the community," he said.
The agreement does include a sweetener for the locals - $20 million to the Rouse Company Foundation, which funds nonprofit groups in the region. The amount will quadruple the foundation's size.
"The foundation will survive the company," Anthony W. Deering, Rouse's chief executive and chairman, said by telephone yesterday. "I think it is a unique recognition of a unique company, and I'm sure Jim Rouse would have a smile on his face."
Rouse, the third-largest real estate investment trust specializing in regional malls, decided to put itself on the market in the past year because the price of buying malls to keep growing was spiraling out of its reach, Deering said.
