French mall operator Klépierre has approached Hammerson with a £4.9bn bid proposal in an attempt to break up the UK property firm’s agreed acquisition of Intu.
Hammerson shares jumped nearly 27% to 554.2p on the news.
Klépierre is trying to thwart Hammerson’s £3.4bn tie-up with Intu that would create Britain’s biggest property company worth £21bn. The deal, announced in December, would bring together Hammerson’s Bullring in Birmingham and Brent Cross in London with Intu’s Trafford centre in Manchester.
Klépierre said it had made a proposal to the board of Hammerson offering to pay 615p a share in cash and shares. It said the bid was rejected in less than 24 hours on 9 March by a brief letter from David Tyler, Hammerson’s chairman, to Jean-Marc Jestin, Klépierre’s chairman.
A source close to Klépierre said it would prefer a constructive dialogue, but was not ruling anything out.
Tyler described the proposal from Klépierre as “wholly inadequate and entirely opportunistic”. He said in a statement: “It is a calculated attempt to exploit the disconnect between our recent share price performance and the inherent value of our unique and irreplaceable portfolio which is delivering record results.
“Klépierre is asking our shareholders to accept a price for their Hammerson shares which is not only at a significant discount to their book value but includes a large element of paper in a company which in our view has a lower quality portfolio and lower growth prospects.”
He said the Hammerson board “sees absolutely no merit in Klépierre’s proposal and has unanimously rejected it,” and advised shareholders to take no action.
Klépierre is one of Europe’s biggest owner of shopping centres and has a market value of €10.5bn (£9.2bn). It owns more than 100 shopping centres in 16 countries serving close to 150 million customers, but does not have a presence in Britain.
Hammerson owns or has stakes in 37 shopping centres and retail parks across the UK, Ireland and France. Its portfolio includes a large shopping centre in Marseille, Les Terrasses du Port.
Klépierre’s move highlights the pressure mall operators are under, as the retail environment gets tougher and more consumers shop online. It means many retailers are closing stores and focusing on the most popular shopping centres, leaving other malls struggling. Last week Toys R Us said it would shut all 100 of its UK stores, with the loss of 3,000 jobs.
Just after Hammerson announced its agreed tie-up with Intu, a bigger deal was unveiled in the industry. France’s Unibail-Rodamco – Europe’s biggest mall operator which owns Forum des Halles in Paris – said it would buy Westfield, the Australian company behind the UK’s two highest-earning shopping centres in London. The £19bn deal will create the world’s biggest mall operator.
Independent retail analyst Nick Bubb said: “The share price of the embattled shopping centre giant Hammerson has slumped since it announced its agreed bid for its UK rival Intu Properties, so the opportunistic 615p offer that French rival Klépierre has recently made for Hammerson is not quite as generous as it looks.
“But, with many of its fashion and department store tenants in some trouble, Hammerson is going to have work hard now to convince its shareholders of the merits of the Intu deal.”