Jilted intu concedes as Hammerson calls it off


Jilted intu concedes as Hammerson calls it off


Published Date: 2018-04-26 | Source: Stephen Gunnion | Author: Stephen Gunnion

Jilted intu concedes as Hammerson calls it off

intu says it will withdraw its recommendation of the transaction and will release Hammerson from all its obligations pertaining to the acquisition

It's official: Hammerson and intu are calling off their £3.4bn marriage proposal. Both companies said yesterday they had agreed to put their proposed merger behind them after Hammerson bowed to pressure from shareholders last week and said it wouldn't recommend the tie-up it put forward in December.

Although intu said it believed the terms of the deal were fair and reasonable, it said Hammerson's offer was conditional on the approval of its own shareholders. Now that it was advising against the deal, intu said there was no realistic prospect of it going ahead. It said it would not proceed with posting the Scheme of Arrangement documents to its shareholders and would also withdraw its recommendation of the transaction. It's also released Hammerson from all its obligations pertaining to the acquisition.

Hammerson had put the bid for intu on ice pending a formal takeover offer from French rival Klépierre, which declined to make an offer earlier this month after the two groups failed to agree on price. Since its initial approach to intu in December, Hammerson said the equity market's perception of the broader UK retail property market had deteriorated, leading to a disconnect between its own share price and the fundamental value of its business and prospects. The financial strength of retailers and other tenants in the UK had softened and a number of retailers had entered into administrations or CVAs (company voluntary arrangements), while consumer confidence had also remained subdued. It said the heightened risks associated with buying intu outweighed the long-term results that could be expected in comparison to other strategic options open to the company.

intu said yesterday that it was entirely confident in its stand-alone commercial future and prospects. In an update last week, the shopping centre owner reported a slight improvement in occupancy rates in the first three months of the year to 96.1% from 95.8% a year earlier. Footfall for the period rose by 1.5%, excluding two weeks of severe snow in February. It expects net rental income for the year to grow by 1.5% to 2.5%, with the outcome expected to be stronger in the second half of the year than the first half. The group has reiterated its guidance for like-for-like net rental income growth of 2% to 3% for the next financial year and over the medium term, subject to no further material tenant failures. It has cash and available facilities of £872 million.

intu's shares rose 0.3% to R35.35 on the JSE yesterday, aided by a weaker rand, while Hammerson gained 0.5% to R93.08.


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