LOS ANGELES » Simon Property Group Inc., the nation's largest shopping mall owner, made a $10 billion hostile bid yesterday to acquire ailing rival General Growth Properties.

The acquisition would allow General Growth, the No. 2 owner of shopping centers—including Ala Moana and Ward Centers in Honolulu—to emerge from Chapter 11 bankruptcy protection. General Growth filed for bankruptcy last year after buckling under the weight of billions in debt it racked up during a massive expansion effort fueled by cheap credit.

The move is Simon's second attempt at a major acquisition in three months. In December Simon offered $700 million in cash and stock to buy more than 60 outlet shopping centers from another competitor, Prime Outlets Acquisition Co. The deal is pending.

General Growth also owns Whalers Village in Kaanapali on Maui and Prince Kuhio Plaza in Hilo on the Big Island. It manages or markets Windward Mall, King's Shops at Waikoloa Beach Resort on the Big Island, Queen Kaahumanu Shopping Center on Maui and Kapolei Commons in West Oahu.

Simon, which owns Waikele Premium Outlets in Waipahu, is using its comfortable cash cushion and credit lines to take advantage of falling commercial property values, which are off 40 percent from their peak in 2007. And General Growth has some prized centers, including the Glendale Galleria in Southern California and the South Street Seaport in Manhattan, N.Y.

General Growth owns four of the five U.S. malls with the highest sales per square foot, with the other owned by Simon, according to estimates by real estate research company Green Street Advisors. General Growth's best-performing malls are the Grand Canal Shoppes and Fashion Show in Las Vegas, Ala Moana Center and Whalers Village, according to Green Street. All four have annual sales per square foot of $1,100 to $1,200.

Simon has been able to weather the economic downturn despite rising retail vacancy rates in the double digits in some cities. The Indianapolis-based company popularized the so-called lifestyle center mall design that turned malls into neighborhoodlike communities. Simon owns more than 380 properties, including the Houston Galleria and the Fashion Valley Mall in San Diego.

Many national retail companies have stores in regional malls like those that Simon and General Growth own. If Simon or another large mall operator were to acquire General Growth's centers, that could give it more muscle to negotiate for higher rental rates with retailers.

Under the terms of the offer, General Growth's unsecured creditors would get $7 billion, which would pay them in full. Shareholders would receive $3 billion, or $6 a share in cash and $3 a share in other assets. The offer, however, might be amended so shareholders could receive Simon stock instead of cash.

“;Simon's offer provides the best possible outcome for all General Growth stakeholders,”; said David Simon, chairman and CEO, in a statement.

A spokesman for Chicago-based General Growth had no immediate comment.

Though the official committee for General Growth's unsecured creditors has backed the deal, stockholders appeared to be looking for a sweeter offer from Simon or another competitor. Shares in General Growth shot up nearly 28 percent, or $2.62, to $12.02.

Simon shares rose $2.82 to $74.82.

Alexander Goldfarb, an analyst with Sandler O'Neill & Partners, said he expects other offers to drive the bidding higher.

“;General Growth has a number of options,”; Goldfarb said. “;This is not the only one.”;

General Growth racked up $27 billion in debt by the time it sought shelter from creditors last April, making it the largest real estate bankruptcy case in U.S. history.

In December a bankruptcy court approved its plan to restructure $10.25 billion in debt. A plan for restructuring another $1.7 billion in debt is up for approval when some conditions are satisfied.