Prime owns the outlet shopping center near I-75 in Calhoun.
Indianapolis-based Simon is paying $700 million in cash and securities. The company said that including the assumption of debt and preferred stock, the deal is valued at $2.33 billion.
Prime Outlets, based in Baltimore, owns, manages, operates and develops 22 outlet centers in major metropolitan areas including Washington and Orlando, Fla.
Once the deal is completed, Simon will have 63 outlet centers with about 25 million square feet.
Simon also owns regional malls and other assets. At the end of the third quarter, the company owned 387 properties with 262 million square feet, including sites in Europe and China.
Simon Property shares rose 78 cents, or 1.1 percent, to close at $74.68 Tuesday.
Under the terms of the agreement, Simon will pay about $700 million for the owners' interests in Prime Outlets, comprising 80 percent of existing cash on hand and 20 percent in Simon common operating partnership units. The price will be based on a 10-day trading average of Simon common stock shortly before closing.
Simon expects the transaction to add immediately to its funds from operations, a widely used gauge of real estate operating performance.
In October, Simon reported funds from operations improved in the third quarter on lower expenses, but occupancy at regional malls and premium outlets slipped about 1 percent.
The company tried to make up some of lost revenue by charging more rent per square foot.
Funds from operations grew to $473.1 million, or $1.38 per share, from $463.9 million, or $1.61 per share, a year earlier. FFO adds depreciation and amortization expenses, as well as other non-operating items, back to net income. Analysts polled by Thomson Reuters had expected $1.32 per share.
Meanwhile, net income declined 7 percent to $105.5 million, or 38 cents per share.
Simon then boosted the low end of its full-year FFO forecast, to a range of $5.40 to $5.50 per share, up from earlier estimates of $5.35 to $5.50 per share. Analysts predict 2009 FFO of $5.43 per share.
In a separate announcement on Tuesday, Simon said it entered into a new unsecured corporate credit facility providing an initial revolving borrowing capacity of $3.57 billion.
The new borrowing is an increase to the company's existing $3.5 billion revolver. The new facility contains an accordion feature up to $4 billion and will mature on March 31, 2013.