By Alexandra R. Moses
The Associated Press

DETROIT - Indianapolis-based mall operator Simon Property Group is raising its $1.5 billion cash offer for smaller rival Taubman Centers and taking the unsolicited bid directly to Taubman shareholders after being rebuffed by the company's board.

Taubman said Thursday that its board will evaluate the $18-a-share bid, a 50-cent-a-share increase over Simon's previous offer, which Taubman rejected. The latest bid is a 35 percent premium over where Taubman shares were traded before the unsolicited bid was launched Oct. 22.

"This compelling all-cash offer will produce full and immediate value that is not otherwise available to TCO shareholders," said David Simon, chief executive of Simon Property Group.

Taubman urged its stockholders to defer a decision on Simon's offer until they have been advised of Taubman's position. Taubman said it will advise stockholders within 10 business days.

Meanwhile, Simon said it has filed a lawsuit in U.S. District Court in Detroit against Taubman Centers, its board and former director A. Alfred Taubman.

The suit says Taubman Centers breached its fiduciary duty by not considering Simon's last offer and allowing the Taubman family to block the deal.

The suit seeks to invalidate the family's control over the company.

Simon Property is the largest North American shopping center owner in the amount of leased space, according to a ranking by the New York-based International Council of Shopping Centers.

Simon owns or has an interest in 249 properties of nearly 186 million square feet in 36 states. Major properties include Washington, D.C.'s The Fashion Center at Pentagon City; The Forum Shops at Caesars in Las Vegas; and Minnesota's tourist attraction, the Mall of America.

Taubman Centers, like Simon Property, is a real estate investment trust. It ranked No. 31 on the industry trade association's list. Taubman owns or manages 30 shopping centers in 13 states. It was founded in 1950 by A. Alfred Taubman, and the company went public in 1992.