Hammerson pulls out of massive retail merger
Shopping centre owner Hammerson has today announced it is to withdraw its offer to acquire rival Intu, which would have created a £21bn company.
Hammerson, which has a portfolio of 37 shopping centres and retail parks including the Highcross centre in Leicester, first announced its intention to acquire Intu on December 6. Intu owns the Broadmarsh and Victoria shopping centres in the East Midlands, as well as the large mall in Derby city centre. The Broadmarsh is the subject of a long-awaited £100m-plus redevelopment.
However, Hammerson said this morning that it had now concluded that the proposed Intu acquisition was no longer in the best interests of shareholders and that it was withdrawing its recommendation to Hammerson shareholders to vote in favour of the Intu acquisition.
Today’s announcement comes just a week after French real estate firm Klépierre walked away from its bid to takeover shopping centre owner Hammerson. Klépierre made its first bid to acquire Hammerson in March.
David Tyler, chairman of Hammerson, said: “In recent weeks, investors have told us they share our view of the exceptional quality of our portfolio and that they have great confidence in our management team. The Board has complete conviction in Hammerson’s prospects as a standalone business as we pursue our plans for future growth.”
David Atkins, chief executive of Hammerson, added: “Hammerson is an ambitious company with a disciplined approach to the pursuit of compelling investments to strengthen its portfolio. It is clear that the heightened risks to the Intu Acquisition now outweigh the longer-term benefits.
“We have a clear strategy that has delivered consistent, strong returns on a standalone basis and we look forward to updating the market in the near term on our plans to accelerate the delivery of further value for shareholders.”
Hammerson said that despite the resilience of its portfolio and strong operating metrics in Q1 2018, the equity market’s perception of the broader UK retail property market had deteriorated since the start of the year.
The firm said: “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.”
The Board of Hammerson reassessed the proposed acquisition of Intu in light of updated information on current market dynamics in the UK.
“Over the last five months, the financial strength of retailers and other tenants in the UK has softened and a number of retailers have entered into administrations or CVAs, while consumer confidence has also remained subdued.
“Whilst Hammerson has proven its portfolio is well positioned to weather the current environment, the equity market now perceives a heightened level of risk associated with the UK retail property sector as a whole,” added the company.
Hammerson said it was also apparent from engagement with shareholders that there was a wide range of views on the merits of the Intu Acquisition.
“The Board recognises and thanks Intu for its commitment during the past months,” it added.
Hammerson generated single-digit growth over the last five years in earnings and has sold £1.3bn of assets in the last three years.
