Shopping centre owner Hammerson has abandoned its takeover bid for Intu Properties after failing to convince shareholders who have grown concerned about the prospects for UK commercial retail property during the Brexit process.
Hammerson announced it would withdraw its offer for Intu, saying the case for a takeover had been weakened by negative perceptions around UK retail. “The equity market’s perception of the broader UK retail property market has deteriorated…. This has led to a disconnect between the company’s share price and the fundamental value of its business and prospects,” said Hammerson.
This perception was intensified by market concerns over the extended period of time it would take to complete the transaction and realise longer-term returns from the Intu acquisition, said the group.
Hammerson and Intu had announced on December 6 that they had agreed to merge to create a £7bn property fund.
Keillen Ndlovu, head of listed property funds at Stanlib, said shareholders reacted negatively to the takeover largely as uncertainty grew around the Brexit process. Hammerson’s portfolio was seen as being superior to Intu’s and had less UK exposure, he said.
“As a result, there have been mixed feelings on why Hammerson is buying Intu. Hammerson has found itself in a defensive mode on the transaction to a point where it had become unclear whether shareholders would support the transaction,” he said.
This was reflected in Intu’s share price, with the company trading at more than 10% below Hammerson’s implied offer price, suggesting the market was not confident the deal would be concluded, he said.
Another red flag was that French group Klépierre had called off a separate bid to buy Hammerson. Klépierre did not want to buy “a Hammerson” that owned Intu and it had not expressed an interest in buying Intu separately itself, he said.
Momentum Investments fund manager Nesi Chetty said UK takeover codes were strict and had a cooling-off period before Klépierre could make another bid for Hammerson.
When asked if Intu would sell any assets separately to Hammerson, Intu CEO David Fischel said that over the past three years the group had disposed of £1bn of assets to recycle capital into its investment programme.
“Intu has the flexibility to make further disposals or part disposals, as around two-thirds of our portfolio, or £6.8bn, is 100% owned,” he said.
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