Archived article

Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.

Combination in structurally challenged retail space is received with scepticism
Thursday 14 Dec 2017 Author: Tom Sieber

A 253.9p all-share takeover offer from Hammerson (HMSO) for Intu Properties (INTU) looks set to deliver a shopping centre investor with more than £21bn worth of assets across Europe. But will the £3.4bn deal create or destroy value for shareholders?

Hammerson swooped after months of weakness in Intu’s share price, having fallen from 293.7p in February to a low of 195.9p at the start of December.

Under the takeover proposal, the enlarged business would operate under Hammerson’s name with its shareholders owning 55% and Intu shareholders the remainder.

Jefferies analyst Mike Prew is unimpressed, describing the transaction as a ‘coalition of weak business models’.

He says Hammerson chief executive David Atkins at a recent capital markets day noted his business was ‘sheltered from UK pressures’ thanks to 56% of its business being overseas.

Assuming the Intu deal goes through, noting that Hammerson has already secured support from half of Intu’s shareholder base, the merged business would be 75% focused on the UK.

Prew also doesn’t see the takeover as a catalyst for the wider space. ‘This is not a cash bid for a high-quality UK REIT by an overseas buyer which would trigger a re-rating of the sector.’

Proving him wrong will require Hammerson to live up to all of its historic track record of operational and financial efficiency and more. (TS)

‹ Previous2017-12-14Next ›