Shopping center owner Hammerson, which owns Birmingham’s famous Bullring, has agreed a £3.4bn takeover of rival Intu.
The offer can create britain’s greatest property company, worth £21bn.
Intu owns the Lakeside shopping center, in Kent. and also the Trafford Center, in Manchester, while Hammerson owns Bicester Village designer outlet and London’s Brent Mix shopping center.
Shares in Intu leaped by nearly 19% in the news, while Hammerson’s fell by 3%.
At market close, Intu shares were buying and selling up 13.6% at 226p, while Hammerson’s was lower 6.2% to trade at 501.5p.
The combined group intends to target fast growing markets in The country and Ireland.
John Strachan, chairman of Intu, stated: “Intu offers high-quality retail and leisure destinations within the United kingdom and The country, which, when merged with Hammerson’s own top-quality assets within the United kingdom, in France as well as in Ireland, present a very attractive proposition for retailers and shoppers in Europe’s leading metropolitan areas.”
Hammerson chairman David Tyler stated: “This transaction will provide real value for shareholders. The financial strength from the enlarged group and it is strong leadership team can make rid of it-placed to benefit from greater growth possibilities on the pan-European scale.”
Hammerson shareholders will own 55% from the combined firm and Intu investors the remainder. Shareholders will election around the deal the coming year.
The combined group could be brought by Hammerson leader David Atkins and chaired by Mr Tyler.
Russ Mould, AJ Bell investment director, described Hammerson’s takeover of Intu as “dramatic, given how terribly Intu’s shares go lower this season, among fears over not only what Brexit may do in order to consumer confidence but the fate of bricks-and-mortar retailers as a result of Amazon . com along with other online rivals”.
Analysis: Dominic O’Connell, Today business presenter
The union of Hammerson and Intu – the organization formerly referred to as Capital Shopping Centres – continues to be the Ultimate Goal of property investment for over a decade.
The relative underperformance on Intu shares, that have at occasions traded for a cheap price to reserve value up to 50%, has introduced an chance for David Atkins, Hammerson’s ambitious leader.
Another main factor was the readiness of John Whittaker, the secretive millionaire who had been the large shareholder in Intu, arrive at the table.
The finish outcome is a shopping center monster – £21bn price of assets across Europe – which will rapidly get rid of underperforming qualities when the deal is performed.
GlobalData retail analyst Sofie Willmott stated the offer will give the combined group a stake in 12 from the 20 United kingdom super-malls – large shopping centres in excess of 20 million sq foot that get more than 20 million customers annually.
This “dominance” would “bolster the group’s negotiating power with retailers and leisure operators”, she added, which help Hammerson to compete better with rival Westfield.
Based on GlobalData forecasts, spending development in supermalls is a result of outstrip overall spending development in bricks-and-mortar stores within the next 5 years.
Ms Willmott stated she expected the enlarged group to “prioritise” supermall development.
“As clothing and footwear retailers concentrate on super-malls to produce large-scale, experience-brought stores, physical retail spend will escape from town centres towards destination shopping centres, making certain supermalls space is hot property,” she stated.
“The suggested deal will internet the audience a stake in almost 60% of United kingdom supermalls space, which makes it a pressure within the retail landscape, in a position to profit from retail spend shifting across locations.”
Find out more: http://www.bbc.co.uk/news/business-42249040