Wednesday 19 December 2018

Dundrum Town Centre landlord fights €5.3bn takeover attempt

Dundrum Town Centre
Dundrum Town Centre

Jack Sidders and Ross Larsen

It looks like Hammerson Plc's shareholders like being a takeover target more than being a buyer.

The operator of shopping malls including the Dundrum Town Centre, Ilac and Swords Pavilions in Ireland, saw its shares gain the most in 28 years after it rejected a £4.9bn (€5.6bn) offer from Klepierre.

That's reversed a share slump that began with Hammerson's own pursuit of rival Intu Properties Plc.

That has led some to question the prospects for the Intu deal, which would create Britain's largest publicly traded landlord.

"Before Klepierre came in, there was no chance" of the Intu deal falling apart, Crispin Odey, whose firm Odey Asset Management is short-selling the landlord, said in an interview.

"If Hammerson are going to have to fight then it's a different game."

Click to view full size graphic
Click to view full size graphic

The companies declined to comment. Hammerson has long coveted Intu's largest UK shopping centres and made a move for the firm in December as shares fell on fears about internet shopping and the impact of Brexit.

Before news broke of Klepierre's bid, Hammerson had slumped about 20pc this year after a slew of bad news from the main street caused retailers and restaurant groups to close stores, slow openings or cut rent bills. Those trends could dampen demand for space in some of Intu's malls, which are less prime than Hammerson's.

Hammerson gained as much as 28pc and Klepierre fell as much as 4.3pc in Paris trading after the offer was confirmed. Intu rose as much as 4.5pc, the most since December.

"Should Klepierre make a second, more successful, approach for Hammerson, it would clearly leave Intu in a difficult place given its high leverage, poor relative trading and the uncertainty which its entire management team will have faced over the past four months," Liberum Capital analyst David Brockton wrote to clients.

Hammerson rejected Klepierre's bid, which was a premium of about 41pc to Friday's closing price, within 24 hours of it being made earlier this month. In a statement yesterday, it said the French firm's property portfolio is of materially lower quality than its own, pointing to its own stakes in luxury outlet malls, development projects and prime European centres.

"Ironically, the response from Hammerson sets out the portfolio's unique properties - many of which we believe would be diluted by the Intu transaction," Peel Hunt analysts including Matthew Saperia wrote in a note to clients yesterday. "The 'marriage of convenience' is now looking considerably less likely."

The Intu offer "is losing credibility" because of the protracted merger process, Jefferies analyst Mike Prew said in a note to clients.

He had earlier said that Intu's problems would be diluted rather than resolved by the merger.

Still, Hammerson has support for rejecting Klepierre's offer. The bid, half of which was to be paid in cash, is highly opportunistic and doesn't make much sense at the present time, a top-15 shareholder said, asking not to be identified.

Shopping mall owners are merging as they try to cut costs and focus on premium properties, making them more attractive to retailers that are opening fewer stores as internet sales rise.

Brookfield Asset Management is seeking to buy GGP Inc and Unibail-Rodamco is trying to take over Australia's Westfield Corp as mall operators globally fight for the biggest and best properties. (Bloomberg)

Irish Independent

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