Final hurdle for Trafford Centre deal

CAPITAL Shopping Centres’ (CSC) acquisition of the Trafford Centre faces the final hurdle of shareholder approval after US-based Simon Property Group shelved its plan to launch a £2.9bn takeover bid.

Amid a bitter war of words from Simon – which describes the Trafford Centre deal as “value destructive” – CSC urged shareholders to back the deal when they vote on January 26.

In a statement the group noted Simon’s decision and reiterated its belief that the acquisition will be in the best interests of shareholders, strengthen its position and increase its presence in the North West retail market.

“The revised acquisition is accretive to CSC’s NAV [net asset value] per share and represents an implied discount of 4.5% to the Trafford Centre’s independent external valuation of £1.65bn at November 1,” said the group.

Simon, which holds 5% of CSC, proposed the 425p-a-share bid in an attempt to block CSC’s planned £1.6bn acquisition of the Trafford Centre from the Peel Group which it said did not represent value for shareholders.

But earlier today it withdrew claiming that CSC failed to provide due diligence information. “Simon therefore has no alternative other than to announce that it does not intend to make an offer for the entire share capital of CSC, and CSC shareholders are unfortunately thereby deprived of the option to sell their shares pursuant to such an offer.”

Simon also believes CSC’s offer gives Peel too much control – a 23.2% stake and the role of deputy chairman for Peel’s owner John Whittaker, pictured right.

This stake was reduced from 24.7% following pressure from Simon, but today the group said the revised terms still overvalue the Trafford Centre, transfer significant control to Peel at a discounted price and dilute CSC shareholdings.

Last week CSC said Simon’s proposal “very substantially undervalues” the business which it said could have a potential net asset value (NAV) of up to 625p a share.

Simon said this was “wishful thinking” and added: “If the CSC board really believes in this potential value, why are they proposing to issue 33% of the company’s existing shares to Peel at a price of 400p, thereby diluting existing shareholders?”