Hammerson withdraws Intu takeover bid

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 Victoria Gate in Leeds and the Bullring in Birmingham, first announced its intention to acquire Intu on December 6 2017. 

However, the firm 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.

Intu has 17 shopping centres across the UK, including the Trafford and Arndale Centres in Manchester, Victoria Centre in Nottingham and Metrocentre in the North East.

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.”

Intu has also this morning issued a statement, stating Hammerson’s explanation to withdraw the bid were “unsatisfactory.”

Intu said: “As recently as 19 March 2018, in its first response to the approach by Klépierre S.A., Hammerson reaffirmed its intention to proceed with the intu Transaction.

“Further, Hammerson issued a positive trading update on 5 April 2018. intu also issued a trading update on 17 April 2018 which underlined its strong trading performance.

“intu therefore regards as unsatisfactory the explanations given by the Board of Hammerson for its withdrawal of its recommendation of the intu Transaction, a transaction which intu has been pursuing in good faith since its announcement on 6 December 2017.

“The Board of intu is entirely confident of intu’s commercial future and prospects. The trading update issued yesterday underlined the key strengths of intu’s business. intu will further update shareholders in due course on its plans.

“The Board of intu will be meeting to consider Hammerson’s request not to convene a shareholders’ meeting to vote on the intu Transaction.”

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.