SHOPPING centre owner Hammerson has called off its plan to take over rival Intu in a £3.4bn deal, amid concerns about the health of the UK retail sector reports Sky News.
Hammerson, which owns Birmingham’s Bullring centre, had agreed in December 2017 an all-share merger with rival Intu, which owns the Lakeside centre in Thurrock and Trafford Centre in Manchester.
Hammerson would have become the biggest UK property company with £21bn in assets if the deal had gone through.
It blamed the weakness in the retail sector for calling off the deal.
Its been a rocky few months for the retailers and their landlords with the likes of Toys R Us, East, and Maplin stumbling into administration. Many others, like Prezzo and New Look, have closed stores.
At the same time, consumers have been tightening their belts as wages have failed to keep pace with inflation. And many have chosen to switch their spending online.
Hammerson “reassessed the proposed acquisition of Intu in light of updated information on current market dynamics in the UK,” the company said in a statement to the London Stock Exchange.
“Over the last five months, the financial strength of retailers and other tenants in the UK has softened and a number of retailers have entered into administrations or CVAs (company voluntary arrangements), while consumer confidence has also remained subdued.
It’s also clear that the deal did not have the backing of shareholders.
“The equity market’s perception of the broader UK retail property market has deteriorated since the start of the year,” Hammerson said in a statement to the London Stock Exchange.
“This has led to a disconnect between the Company’s share price and the fundamental value of its business and prospects.
“This perception has been intensified by market concerns over the extended period of time that it would take to complete the transaction and realise longer-term returns from the Intu Acquisition.”
Hammerson, which also owns Brent Cross in north London and Cabot Circus in Bristol, said it would sell assets and invest more in premium outlets and Ireland.