Vornado may acquire developer Mills Corp.

BUSINESS DIGEST

March 08, 2006|By ROBERT MANOR | ROBERT MANOR,CHICAGO TRIBUNE

Vornado Realty Trust might be set to gobble up all or part of the Mills Corp., the troubled developer of the giant Arundel Mills mall in Hanover.

New York-based Vornado confirmed in a Securities and Exchange Commission filing yesterday that the company's management "has had an informal dialogue with management of The Mills Corp." Vornado first disclosed the news during a conference call Monday with investment analysts.

That set off reports that Vornado might be interest in buying Mills, which has announced it is up for sale in whole or in part.

Morningstar stock analyst Ryan Dobratz said he thought Vornado might be interested in parts of Mills rather than all of the company.

"The most desirable part of Mills are its regional malls," Dobratz said. "They also have a pretty attractive development pipeline."

Dobratz said Vornado is financially strong and would have no difficulty buying pieces of Mills. "They always have the capacity to make buys," he said. "They are a value-oriented company."

Wendi Kopsick, a spokeswoman for Vornado, declined to answer questions.

"We are not providing any comment beyond" the SEC filing, she said.

A spokesman for Mills Corp. could not be reached for comment.

In January, Mills said it would take a $77 million charge because of expenses related to failed projects.

The company faces a number of problems. The company has said it will restate some past financial statements and is under investigation by the Securities and Exchange Commission.

The company announced last month that it had hired Goldman Sachs and JPMorgan as financial advisers and said it was contemplating "a sale of all or part of the company."

Mills, which owns 42 properties in the United States, Canada and Europe, has been hurt by disclosures of accounting errors. Mills said last month that it doesn't expect to meet a March 16 deadline to file its 2005 annual report with the SEC.

Meanwhile, a shareholder lawsuit seeking class-action status was filed yesterday in the U.S. District Court for the Eastern District of Virginia in Alexandria.

The lawsuit, filed on behalf of buyers of Mills Corp. shares between Feb. 17, 2004, and Jan. 6 of this year, accused Mills, Chief Executive Officer Laurence C. Siegel and other executives of "issuing a series of false and misleading financial results" to inflate the company's share price.

Mills shares fell 36 cents to $40.04 in New York Stock Exchange composite trading. Vornado shares fell 38 cents to $91.48.

Robert Manor writes for the Chicago Tribune. Bloomberg News contributed to this article.

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