Hammerson to form UK giant shopping centre group with acquisition of Intu

London - British shopping center owner Hammerson is set to take over rival Intu Properties in a 3.4 billion pound deal, which would see leading shopping centers including London’s Brent Cross, the Birmingham Bullring and Manchester’s Trafford Centre owned by a single company.

Hammerson, which currently owns Brent Cross and the Bullring together with Cabot Circus in Bristol as well as other properties in Ireland and France, predicts the deal will lead to the development of a 21 billion pound portfolio of retail and leisure properties. The deal would see the creation a new mega-UK shopping center company.

Hammerson to take over rival Intu and form leading UK shopping center company

The deal sees Hammerson offering 253.9p per Intu share, a 27.6 percent premium to its close on Tuesday evening. The agreement would see Hammerson shareholders owning approximately 55 percent of the new combined company and Intu shareholders owning the remaining. Shares in Hammerson declined 4.2 percent Wednesday morning following the announcement, while Intu’s stock increased more than 18 percent.

"This marks an exciting milestone in the history of Hammerson. Bringing together the high-quality portfolios of both companies establishes Hammerson as a larger, leading European retail REIT, enhances shareholder returns and supports opportunities for long-term growth,” said David Atkins, Chief Executive of Hammerson on the deal. “The acquisition creates a leading pan-European platform of desirable retail and leisure destinations which are better positioned to serve the needs of our retailers, excite our customers and support our partners and communities.”

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As British retail sales continue to grow at a slower pace than previously forecast due to increasing pressure on consumer income and concerns over the social and political climate, Hammerson has vowed to sell 2 billion pounds of its assets if its all-share deal is accepted in order to strengthen the new combined company’s balance sheet.

Under the deal, Hammerson would keep its name, as the new shopping center giant will be run by its chairman David Tyler together with its chief executive David Atkins. Intu deputy chairman John Whittaker is set to become deputy chairman and John Strachan, chairman at Intu, will join the board as senior independent director. The new, combined company will have a total of six directors nominated by Hammerson and four by Intu.

"This transaction will deliver real value for shareholders. The financial strength of the Enlarged Group and its strong leadership team will make it well-placed to take advantage of higher growth opportunities on a pan-European scale,” commented David Tyler, Chairman of Hammerson on the acquisition.

The new combined group gives Hammerson and Intu a stake in 12 of the 20 super shopping centers in the UK (shopping centers over 20 million square feet). The move will bolster the group’s negotiating power with both retailer and leisure operations to help develop destination shopping centers which will allow Hammerson to go head to head with Westfield.

Even though the group aims to sell 2 billion pounds in assets to improve its balance sheet, these are not likely to be part of the super shopping centre group, as spend is set to rise 7.2 percent in the location over the next five years, outstripping growth in physical retail forecast at 5.0 percent (across non-food sectors), according to GlobalData’s forecasts. “We expect the combined group to prioritise supermalls development, enhancing the locations to appeal to shoppers looking for product and retailer choice alongside an exciting food service and leisure offer,” commented the firm in a statement.

Photos: Courtesy of Hammerson