Merry Hill owner facing uncertain future after investor talks collapse
intu, the owner of the Merry Hill shopping mall, is facing a bleak future according to market analysts.
Shares in the company plunged by 31% after it emerged a Hong Kong investor had pulled out of funding talks.
Intu – which has been at the centre of two failed takeover bids – announced on Monday it was in talks with Manchester property firm Peel and Link Real Estate Investment Trust over a £1bn fund raise.
That was followed by a statement the day later to say Link had pulled out of the talks.
Intu – which has been hit by the downturn in the retail sector and a wave of administrations – has debts of £4.7bn.
Peel, which was set up by Manchester businessman Bob Whittaker, is the largest shareholder in the business.
Many of Intu’s biggest tenants including Debenhams, House of Fraser and Arcadia, have been closing stores or asking for rent reductions.
The firm has started selling off some of its shopping centres to raise cash.
Shanti Kelemen, investment director at Brown Shipley, issued a warning over the future of the firm.
She said: “Intu will likely end up being owned by whoever owns the debt.
“It’s symptomatic of the wider retail sector with the trend of people moving to shopping online.”
She said the retail sector was also facing other “headwinds” such as high business rates and increases to the minimum wage.
“It will be hard to find a company ready to put sizeable funds into a firm which has negative trends in its malls,” said Jonathan De Mello, the head of retail consultancy at Harper Dennis Hobbs.
“But Intu’s shares are trading at a massive discount, and there is a disconnect between its market cap and the value of their property assets.”
The news of the failed talks saw shares plunge to an all-time low of 11p, giving the company a market value of just £163 million.
Five years ago shares were valued at more than 370p.
Link said in a statement: “Link remains interested in opportunities in the UK, but our negotiations with intu have not reached an agreement.”