UPDATE 2-Inland American mulls takeover of Cedar Shopping

(Recasts; adds details, additional analyst commentary; updates share movement)

By John Tilak

BANGALORE, Jan 23 (Reuters) - Inland American Real Estate Trust Inc, which reported a 9.8 percent stake in Cedar Shopping Centers Inc (CDR.N), said it was considering seeking control of the real estate company through an acquisition, merger or gaining representation on Cedar's board.

In a regulatory filing, Inland American said on Tuesday it planned to ask Cedar Shopping to waive a limit that prohibits any person or group from owning more than 9.8 percent of its outstanding stock.

Cedar shares, which have lost about 30 percent since the start of 2007, rose more than 7 percent to a high of $10.93 Wednesday. The stock trades at more than 8 times forward earnings, lagging the Retail REIT sector that trades at a multiple of more than 12.

If Inland American were to takeover Cedar, any offer price below $14 a share -- 38 percent more than the stock's Tuesday close price of $10.16 -- would not be in the interest of shareholders, Cantor Fitzgerald analyst Philip Martin said.

BMO Capital Markets analyst Paul Adornato said Inland could pay $13 per share, a 28 percent premium to Tuesday's closing price.

Inland American could not be reached for comment, while Cedar Shopping did not immediately respond to a request for an interview.

Oak Brook, Illinois-based Inland American, one of the largest retail center owners in North America and part of Inland Real Estate Group of Cos Inc, was formed in 2004 to acquire and develop commercial real estate.

Adornato said it made a lot of sense for Inland American to acquire Cedar Shopping as it had a lot of cash to spend and was looking for management expertise, not just collections of assets.

"Cedar represents a good fit as it has a good development team in place and they also have high quality assets in a desirable part of the United States, the Northeast," Adornato said by phone.

Cedar owns supermarket-anchored shopping centers, which see more consumer traffic than other commercial properties, and are consequently better protected against a possible U.S. recession, Adornato said. Port Washington, New York-based Cedar owns and operates 118 properties.

Inland American typically does friendly deals, but there is no reason why it cannot make a hostile takeover, said Adornato, who upgraded Cedar's stock on Wednesday to "outperform" from "market perform."

In 2007, Inland bought Apple Hospitality Five Inc for $709 million, and it outbid another firm to buy real estate investment trust Winston Hotels Inc in a deal valued at about $850 million.

Cantor's Martin said Inland American's motivation was that it sees Cedar as a company with a concentrated portfolio that is trading significantly lower than underlying net asset value.

Martin's net asset value estimate for Cedar is $13.56 a share.