Trafford Centre deal delayed as CSC and Peel reject Simon’s approaches
Capital Shopping Centres (CSC) has dismissed US real estate giant Simon Property Group’s indicative offer of 425p per share for the business, describing it as “yet another attempt to frustrate the Trafford Centre acquisition without putting forward a proper proposal for shareholders to consider as an alternative”.
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The firm has, however, announced that it is to adjourn the extraordinary general meeting which was planned to approve its £1.6bn Trafford Centre purchase, which was due to take place next week.
CSC has responded to Simon Property Group’s “indicative” offer of 425p a share, which values it at approximately £3bn. In a statement yesterday afternoon, the firm said that it had decided to adjourn the general meeting planned to approve the £1.6bn Trafford Centre deal in order to provide shareholders with the necessary information regarding Simon Property Group’s offer. It said that the 425p offer “very substantially undervalues” the company.
CSC argues that it owns an “irreplaceable and unrivalled portfolio of shopping centres built up over 30 years that is impossible to replicate given the barriers to entry in this sector”.
It said that once the £1.6bn Trafford Centre acquisition completes, it will own four of the UK’s six biggest shopping centres and pointed out that Simon’s proposed bid is conditional both on it raising the necessary finance and the due diligence process.
It added that the deal would also still need the approval of Simon’s own board and that no timetable for a likely bid had been set out. It also pointed out that Simon’s indicative offer, for which the non-completion of CSC’s Trafford Centre bid is a precondition, included a clause allowing it to reserve its right to terminate its offer at any time.
“The board strongly believes that the inclusion of the Trafford Centre in CSC’s portfolio will significantly enhance CSC’s value,” CSC said in a statement.
“The board believes that CSC’s portfolio will generate long term attractive returns for shareholders significantly superior to Simon’s cash proposal.”
CSC said that it planned to reconvene a meeting allowing shareholders to vote on the Trafford Centre deal in late January.
“Unless Simon provides to CSC, in advance of the adjourned EGM date, a firm proposal that the board would be willing to recommend, the board expects to continue to recommend the Trafford Centre acquisition,” CSC said.
Simon Property Group submitted its indicative offer of £3bn for Capital Shoping Centres yesterday morning but set a number of conditions for the deal – the chief one being that the £1.6bn Trafford Centre deal, which give Peel founder John Whiittaker a 19.9% stake in Capital Shopping Centres, was not completed. It has argued that CSC is overpaying for the Trafford Centre and that the deal would suck cash out of the combined business.
Simon Property Group currently holds a 5.1% stake in Capital Shopping Centres.
Meanwhile, Peel Group has confirmed its commitment to the deal and said that it had also recently received “a number of contradictory communications and most recently a highly conditional indicative proposal” from Simon Group, which it had also rejected.
“Peel strongly believes in the future growth prospects of CSC as an independent UK company.
“The enlarged group, enhanced by the inclusion of the Trafford Centre, will have a unique portfolio of super prime UK regional shopping centres. This portfolio and the addition of Peel’s proven UK retail and leisure property expertise will drive significant incremental future growth for the benefit of all shareholders.”
