£2.8bn property deal looks to be going ahead

A £2.8bn deal which will create one of the largest property firms in the UK appears to be edging closer to completion.

Manchester property giant Peel is part of a consortium which is looking to buy intu – which owns shopping centres across the UK including the Arndale and Trafford Centre.

Intu made a statement to Stock Market this morning giving details of the bid which was originally thought to be £2bn.

The news broke at the start of the month that Peel along with the the Olayan Group and Brookfield Property Group were looking to buy intu.

The trio announced that they were in the preliminary stages of considering a possible cash offer for the Company.

The Peel Group, owned by John Whittaker, is leading the consortium.

Mr Whittaker is deputy chairman of Intu and Peel Group holds around 26% in the shopping centre firm, while Olayan holds about 3.5%.

Intu operates 18 shopping centres across the UK, including the Trafford and Arndale Centres in Manchester and Metrocentre in Gateshead.

Earlier this year a £3.4bn takeover by rival Hammerson fell through.

Intu released a statement to the markets which appeared to indicate the deal is moving forward.

The statement reads “intu confirms that on 11 October it received an indicative proposal from the consortium of 205 pence per share in cash, subject to an adjustment for dividends.

“The independent committee formed by intu – comprising all directors of intu other than John Whittaker – and its financial advisers met to consider the Indicative Proposal.

“Following further engagement, on 17 October intu received a revised indicative proposal from the Consortium of 215 pence per share in cash, subject to an adjustment for dividends.

“Accordingly, should any offer on the terms of the Revised Indicative Proposal be forthcoming the consideration would be 210.4 pence per share and may be reduced further by any other dividends or other distributions declared, payable or paid by intu prior to completion.

“In order to advance discussions regarding the possible announcement of a firm offer, the Independent Committee has resolved to grant the consortium access to certain due diligence materials.

“A further announcement will be made when appropriate.”

Intu said it intends to issue a trading update as soon as possible, which will include the outcome of an updated independent valuation of the company’s investment and development properties.

Russ Mould, investment director at Manchester investment platform AJ Bell, said: “A 215p cash bid for Intu Properties has emerged from discussions between the shopping centre landlord and a consortium led by deputy chairman John Whittaker’s Peel vehicle – already a near-30% shareholder.

“This is not yet a formal offer – a deadline of 5pm on 1 November remains in place – but it offers some indication of what Intu shareholders can expect to receive.

“It could hardly be construed as generous, particularly as any dividends paid before the deal completes will be taken off the offer price.

“Fellow mall investor Hammerson was apparently prepared to pay the equivalent of 253.9p in an all-share offer before jilting Intu earlier this year and the company’s current net asset value is 362p.

“Yet an imminent revaluation of Intu’s assets might cast the price in a better light as many analysts believe retail sector property valuations will have to be marked down.”