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Credit Suisse ups Hammerson target, says Klepierre deal more likely than Intu
Credit Suisse has upped its price target on neutral-rated Hammerson a day after it emerged that it recently rejected a £5bn bid from French shopping centre operator Klepierre, a scenario it deems to be more likely to go ahead than the planned acquisition of Intu Properties announced in December.
The bank lifted its price target to 550p from 460p after Hammerson confirmed that it had rejected Klepierre's 615p a share offer. It said that although the bid was rejected within 24 hours, given that it represents a 41% premium to last Friday's share price, some of Hammerson's shareholders could be tempted to extract a formal proposal.
"Last week we re-opened our rating differential between Hammerson and Intu based on a decreased probability that Hammerson's takeover offer was successful; Klepierre's announcement further reduces that likelihood," it said.
Credit Suisse also said it's possible that a higher committed offer for Hammerson emerges from another party, although it does not expect this.
Its revised price target on the stock is based on a probability weighting of three scenarios: a 30% probability of a combination with Intu at a 25% discount to its pro forma spot NAV of 610p; a 50% probability of committing to the 615p indicative offer; and a 20% probability of Hammerson remaining independent at a 20% discount to stand-alone spot NAV of 679p.
CS added that if Hammerson shareholders accepted Klepierre's indicative proposal, its shareholders would diversify their exposure across Europe, in contrast to the UK concentration that would result from a combination with Intu.
Hammerson said on Monday that it had rejected Klepierre's bid on the basis that it was "entirely opportunistic" and "significantly" undervalues the group and its track record of delivery.
At 0950 GMT, Hammerson shares were down 0.7% to 538p.