Search Share Prices
Hammerson has a change of heart over Intu takeover
Hammerson has withdrawn its recommendation for its proposed £3.2bn takeover of Intu Properties, blaming problems in the UK retail market and opposition among some shareholders for its change of heart.
The shopping centre owner agreed in December to buy Intu in an all-share deal that valued its rival at £3.4bn at the time. The acquisition would have combined Hammerson's Brent Cross and Bullring shopping centres in London and Birmingham with Intu's Trafford Centre in Manchester and Bicester Village designer outlet near Oxford in a £21bn portfolio.
Since the announcement, several retailers and restaurant chains have gone into administration or extracted new terms from creditors, raising concerns about the market for shopping centres. Credit Suisse analysts argued in March that buying Intu would increase Hammerson's exposure to low-growth UK markets as conditions for retailers get tougher.
Hammerson withdrew its recommendation shortly after it rejected a £5.04bn bid from Kleppiere of France. It said sentiment among equity investors about the retail property market had worsened since the start of 2018 and that consumer confidence had weakened.
"This has led to a disconnect between the company's share price and the fundamental value of its business and prospects. This perception has been intensified by market concerns over the extended period of time that it would take to complete the transaction and realise longer-term returns from the Intu acquisition," Hammerson said.
Hammerson's board looked again at the proposed Intu deal after the financial strength of retailers and other tenants weakened in the past five months. "It is also apparent from extensive engagement with shareholders, in particular in recent weeks, that there is a wide range of views on the merits of the Intu acquisition," Hammerson added.
Hammerson shares rose 3.5% to 510.8p at 08:22 BST while Intu shares dropped 6.4% to 195p.
Intu dismissed Hammerson's reasons for its change of mind, pointing out that Hammerson said on 19 March it was committed to the deal, which would create significant value for Hammerson shareholders. Intu also highlighted its own trading update on 17 April that reported a strong first quarter.
"Intu therefore regards as unsatisfactory the explanations given by the board of Hammerson for its withdrawal of its recommendation of the Intu transaction, which intu has been pursuing in good faith since its announcement on 6 December," Intu said.
Hammerson said its withdrawal of the recommendation to shareholders did not cancel its offer for Intu and that it would hold a shareholder meeting to vote on the deal unless Intu and the Takeover Panel agreed otherwise. Intu said its board would consider Hammerson's request not to convene a shareholder meeting to vote on the acquisition.