(CNN) — American malls are struggling, and the industry is consolidating in a fight to keep its head above water.

Indianapolis-based Simon Property Group, the largest owner of US malls, is doubling down on the sector with a $3.6 billion purchase of rival mall operator Taubman Centers. Taubman owns or manages 26 malls, including Short Hills Mall in New Jersey, Beverly Center in Los Angeles and Dolphin Mall in Miami.

Taubman is a relatively high-end mall operator, generating $972 in sales per square foot and an occupancy rate of about 94% at the end of last year. But it also just reported a loss for the fourth quarter primarily because of restructuring charges related to some of its properties. It has been in the process of selling some malls, primarily in Asia.

The deal would pay Taubman shareholders a 51% premium over the most recent closing price. Shares of Taubman jumped more than 50% in premarket trading on the news. Shares had already been up 11% this year, but the stock is down about 30% from its price 12 months ago.

Meanwhile shares of Simon were little changed on the news. Its stock is down 5% this year, and 24% over the course of the last 12 months.

With the growing popularity of online shopping, traditional brick-and-mortar retailers have been suffering in recent years. A record number of stores closed in 2019.

The department store sector, the anchors of many malls, has been hit particularly hard, facing competition not just from online retailers such as Amazon, but from discount brick-and-mortar and big box retailers. For example Macy’s announced plans last week to close 125 stores in the next three years.

Still, this is the second high-profile purchase Simon has made in the traditional brick-and-mortar retail space this month. It is the lead in a consortium that will spend $81 million to purchase of the assets of clothing retailer Forever 21 out of bankruptcy court. That deal remains subject to bankruptcy court approval.

The Taubman deal is subject to shareholder and regulator approval and expected to close this summer. The Taubman family, which controls 29% of the company, will continue to hold 20% of Taubman Centers after the deal, with Simon buying the other 80%.