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Hammerson tries on Intu for size
Posted on Wednesday, 06 December 2017 15:18
Hammerson is taking smaller competitor Intu Properties private in an all-scrip deal worth GBP 3.44 billion at time when retailers are coming under increasing pressure from Internet shopping and weaker consumer demand.
The two mall operators have decided to weather the expected upcoming sector slowdown by combining via an offer equating to 254.00 pence per share, or a premium of 9.4 per cent to the six-month volume weighted average.
Zephyr, the M&A database published by Bureau van Dijk, shows the deal is the seventh-largest acquisition of a UK company announced this year to date.
It should create an enlarged pan-European real estate investment trust (REIT), which will retain the name Hammerson but continue to use the brand Intu within its portfolio, with gross asset value of GBP 21.00 billion.
As a top three player, this entity expects to have increased exposure to higher-growth destination shopping centres while bringing assets in Ireland and Spain, two of Europe’s fastest-growing economies, under one umbrella.
Its portfolio will comprise 18 properties spanning malls, retail parks, premium outlets and the ever-important online affiliated website, and include names such as the Bullring in Birmingham and Manchester’s Intu Trafford Centre.
On a pro forma basis, as at 30th June 2017, the combined REIT will have net debt of GBP 8.20 billion (Hammerson: GBP 3.60 billion; Intu: GBP 4.60 billion).
Its loan to value ratio is expected to be around 41.0 per cent (Hammerson: 37.0 per cent; Intu: 45.0 per cent), as of 30th June 2017.
Hammerson has already carried out a preliminary assessment and identified at least GBP 2.00 billion of disposals from across both portfolios, and primarily within the UK, which will be carried out over the short to medium term.
The shopping centre operator added proceeds will provide financial flexibility to invest in higher return opportunities in Spain, Ireland and premium outlets, and its development pipeline.
© Zephus Ltd