Simon opposes CSC’s improved Trafford Centre deal

SIMON Property Group, the company which has sought to derail Capital Shopping Centres’ £1.6bn bid for Peel Group’s Trafford Centre shopping complex, has said that it will continue to oppose the deal despite the improved terms announced last week.

On Friday, CSC announced that shares being offered to fulfil the £750m equity element of the £1.6bn deal had been repriced to 400p from 368p. This means that Peel’s potential stake in the enlarged company has reduced to 23.2% from 24.7%.

Simon Property Group, which is the largest real estate company in the US, argues that the valuation remains “too high”.

A statement from the company said: “The CSC board is still proposing to transfer significant control of CSC to Peel at a discounted price.”

It also argued that the deal would still have a negative impact on CSC’s cashflow to the tune of £27m a year.

Simon Property Group has submitted its own indicative offer for CSC, which is conditional on the Trafford Centre acquisition not being completed. CSC’s board said that Simon’s bid of 375p “significantly” undervalues the company, and produced reports last week which indicated that the firm has a “potential net asset value of up to 625p”.

Simon has dismissed this as “wishful thinking”.

A statement from Simon Property Group said that the valuation “seems designed to frustrate an offer from Simon”.

“If the CSC board really believes in ‘potential net asset value of up to 625p’, why are they proposing to issue 33% of the company’s existing shares to Peel at a price of 400p, thereby diluting existing shareholders?

“Simon therefore continues to oppose this value-destructive transaction and intends to vote against it at the CSC EGM  on January 26, 2011. Simon urges its fellow CSC shareholders to do the same.”