What happened 

Shares of Taubman Centers, Inc. (NYSE:TCO) plummeted after a merger deal between the company and Simon Property Group Inc. (NYSE:SPG), the country's largest mall owner, was terminated. Taubman's stock fell by as much as 41% in the morning.

As of 12:17 a.m. EDT, the company's shares were down 20.8%.

So what

Simon Property said in a press release this morning that it had terminated its Feb. 9 merger agreement, adding that Taubman had suffered a "material adverse event" because of the coronavirus pandemic. 

Image of a street sign that says Wall St.

Image source: Getty Images.

In the statement, Simon Property explained: "First, the COVID-19 pandemic has had a uniquely material and disproportionate effect on Taubman compared with other participants in the retail real estate industry. Second, in the wake of the pandemic, Taubman has breached its obligations, which are conditions to closing, relating to the operation of its business." 

Simon added that Taubman had "failed to take steps to mitigate the impact of the pandemic as others in the industry have, including by not making essential cuts in operating expenses and capital expenditures."

Taubman investors were clearly concerned that the merger deal is falling apart and sent the stock tumbling all morning.

Now what 

The $3.6 billion merger agreement between Simon Property and Taubman was created just before the COVID-19 pandemic wreaked havoc on the U.S. economy and the retail industry. With malls and retailers still trying to find their footing as states slowly open back up, these two companies are both in survival mode right now. As such, any hope that this merger will happen as originally planned is likely misplaced.