General Growth Properties Inc. GGP +0.45% Monday rebuffed activist shareholder Bill Ackman's efforts to push it to consider a sale, arguing that the gains it has made since leaving bankruptcy protection in 2010 portend additional improvement as a stand-alone company.
"After reviewing your letters and giving the matters you raised serious consideration, the board has unanimously determined that the best value for all shareholders will be achieved by GGP continuing to execute on its well conceived business plan," General Growth Chief Executive Sandeep Mathrani wrote in a letter to Mr. Ackman Monday.
The board's decision against investigating putting General Growth up for sale appears to scuttle, for the time being, a potential bidding war between larger rival Simon Property Group Inc. SPG +1.94% and General Growth's largest shareholder, Brookfield Asset Management Inc. BAM +2.06% Brookfield owns roughly 42% of General Growth's shares, including warrants that it hasn't yet exercised. Mr. Ackman's Pershing Square Capital Management owns a 10% stake.
Mr. Ackman didn't respond to a message seeking comment late Monday about General Growth's decision.
General Growth, based in Chicago, owns roughly 150 U.S. malls, including flagships Ala Moana Center in Honolulu, Water Tower Place in Chicago and Fashion Show mall in Las Vegas. The company has roughly $20 billion in debt and an equity value of $19.3 billion.
General Growth's letter to Mr. Ackman outlined areas in which the mall owner has made improvements in the past two years, including replacing short-term tenants with long-term leases, buying anchor stores at its malls and refinancing debt at cheaper rates. Brookfield CEO Bruce Flatt sent a letter to General Growth shareholders on Monday echoing those points and positing that the company can fare better on its own.
"In summary, we believe a sale of GGP at this point would substantially undervalue GGP's future potential," Mr. Flatt wrote.
Mr. Ackman, one of the architects of the recapitalization plan that lifted General Growth out of bankruptcy and made Brookfield its largest shareholder, in recent weeks has pushed for General Growth's board to form a committee of its independent directors to preside over a process of putting the company on the block. He has argued that the mall owner's shareholders would fare better if Simon bought the company.
In late August, Mr. Ackman sent two letters to General Growth's board that also were filed as public documents with the Securities and Exchange Commission. In the letters, Mr. Ackman outlined how last year he had approached Simon, which had made a failed bid to buy General Growth during its 19-month bankruptcy stint and spurred renewed interest from Simon in bidding for General Growth again.
The latest decision of General Growth's board came after directors met for several hours Friday to interview three candidates to hire as financial advisers to advise them on the company's options, people familiar with the talks said.
Some analysts say that it is unlikely that Mr. Ackman, who has tangled with many boards, will let the matter rest. "It is unlikely for someone like Bill Ackman that this would signify the end of the process that he's been attempting to put together," said Cedrik Lachance, an analyst at Green Street Advisors Inc.