Hammerson has bowed to shareholder pressure and aborted bid for intu
In a shock announcement Hammerson has told its own shareholders it cannot recommend that they vote in favour of its proposed acquisition of rival shopping centre investor intu.
The Hammerson board had come under increasing pressure after its second-biggest shareholder, Dutch pension group APG, publicly attacked the plan. Now the board has said: “the proposed intu acquisition is no longer in the best interests of shareholders.” And it will not be recommending them to vote in favour at the coming shareholders meeting.
Explaining the volte face, Hammerson said in a Stock Exchange announcement: “Despite the resilience of Hammerson’s portfolio and strong operating metrics in Q1 2018, the equity market’s perception of the broader UK retail property market has deteriorated since the start of the year. 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.
“The Board of Hammerson reassessed the proposed acquisition of Intu in light of updated information on current market dynamics in the UK. 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, while consumer confidence has also remained subdued.
“Whilst Hammerson has proven its portfolio is well positioned to weather the current environment, the equity market now perceives a heightened level of risk associated with the UK retail property sector as a whole. It is also apparent from extensive engagement with shareholders, in particular in recent weeks, that there is a wide range of views on the merits of the Intu Acquisition.
“As a result, the Board of Hammerson has concluded that the heightened risks associated with the Intu Acquisition outweigh the long-term rewards that can be expected in comparison to other strategic options open to the Company. The Board has therefore now concluded that the proposed Intu Acquisition is no longer in the best interests of Hammerson shareholders.”
Intu shareholders have already voted in favour of the acquisition, which means that under that Takeover Code Hammerson cannot unilaterally withdraw from the deal, unless the Takeover Panel or intu agree to release it. If neither of these are forthcoming Hammerson shareholders will still have to go through the formality of a vote on the deal.
In a counter-statement intu’s board said it regarded Hammerson’s explanation as “unsatisfactory” but said it would consider Hammerson’s request to cancel its shareholder meeting.