Hammerson and Intu to merge, will be giant force in Europe and UK
Big news on the shopping mall front in the UK on Wednesday as property giant Hammerson is planning to merge with major rival Intu.
The £3.4 billion merger would create one of the largest property businesses in Britain and Europe and would see a raft of major shopping centres under the control of the new £21 billion firm.
The move comes as shopping malls suffer from increasingly weak visitor traffic but as super-sized malls prove the most resilient in the face of the tough retail backdrop.
An the merged group will have stakes in 12 of only 20 supermalls in Britain. Analysts at Globaldata said this “will bolster the group’s negotiating power with both retailers and leisure operators, helping to create destination shopping centres with all-round appeal, enabling the group to better compete with experience-focused Westfield, which has set the bar high.”
Will the merger actually happen? It seems likely. The deal has been agreed by both parties’ boards although shareholders also need to approve. Intu has already secured more than 50% investor support but a final vote won’t happen until next year. Hammerson investors will end up with a 55% stake while Intu’s will hold 45%.
“The boards believe that there is a compelling strategic rationale for the acquisition, which will bring together their high-quality retail property portfolios and their combined expertise to create a leading European retail REIT with a strong income profile and superior growth prospects,” the companies said.
Intu is strong in the UK and Spain while Hammerson is a power player in the UK, France and Ireland and the firms said the deal will “present a highly attractive proposition for retailers and shoppers in Europe’s leading cities.”
Hammerson’s properties include big name malls such as the Bullring in Birmingham, Bicester Village (part ownership), Cabot Circus, Victoria Gate in Leeds, France’s Espace Saint-Quentin and London’s soon-to-be-revamped Brent Cross. Intu owns Lakeside, Manchester’s Trafford Centre, Gateshead’s Metrocentre, The Mall Cribbs Causeway and Intu Asturias, among others.
The merger will give the firms “enhanced exposure to high-growth markets” and offer “attractive growth prospects with exposure to two of Europe's fastest growing economies of Ireland and Spain and additional sources of capital to forge ahead with ambitions to expand the Premium Outlets platform.”
The merged group will be led by Hammerson’s David Atkins as CEO, and Timon Drakesmith as CFO and will be called Hammerson plc. David Tyler, chairman of Hammerson, will also be chairman of the new group, while John Whittaker, deputy chairman of Intu, will take that role at the new firm. Current Intu chairman John Strachan will join the board as senior independent director.
Tyler added: “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.”
But the merger will also involve a raft of cost cuts and this should also mean around £2 billion worth of assets being divested.
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