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Oct 5, 2018
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Intu is bid target after Hammerson merger failure

Published
Oct 5, 2018

It’s not that long since the planned mega-merger between shopping malls giant Hammerson and slightly smaller peer Intu was called off after Hammerson became a bid target. But now Intu is itself the subject of a prospective bid as a consortium of British and international investors look at making a play for the company.


Intu



The consortium includes UK billionaire John Whittaker and Canada-based Brookfield Asset Management who see the £2 billion operation as interesting, despite the well-publicised woes in the UK physical retail space.

The Whittaker family’s Peel Group investment vehicle is linking up with property specialist Brookfield and also Saudi Arabia-based Olayan Group to target the owner of a raft of the UK’s best known shopping centres, as well as three Spanish malls.

Will a bid/takeover happen? “The consortium’s consideration of the possible offer is at a preliminary and exploratory stage and no approach has been made to the board of Intu,” the group said in a statement. So the answer is, we don’t know yet. 

And as we saw with Hammerson, when France’s Klepierre made an approach, it was quickly rebuffed as undervaluing the firm.

The difference here though is that Whittaker is already Intu’s largest shareholder, and has long been seen as someone who could make a bid for the entire business. His Peel vehicle owns over 26% of the firm and he’s also deputy chairman. That situation came about when he sold the Trafford Centre to Intu’s predecessor, Capital Shopping Centres, in 2011.

But Olayan is also a shareholder, albeit with a smaller holding, the combined stake of Peel and Olayan adding up to 29.9%.

Intu has been seen as being a likely bid target ever since the Hammerson merger collapsed and the fact that it’s still seeking a CEO, after news that David Fischel is to leave, adds to the air of uncertainty around it.

Intu itself has said very little about the potential offer, apart from having set up an independent committee of all of its directors (but not Whittaker, of course) to consider any bid approaches. The consortium now has until November 1 to make a firm offer or walk away from any deal.

The big question though is whether any other suitors might step forward. As Klepierre’s interest in Hammerson showed, UK retail may be tough, but well-run UK companies with potential to grow are of interest. And the weakness of the pound at the moment also makes them cheaper now than they would have been a couple of years ago. That’s especially the case for Intu, whose shares have fallen sharply over the last year. On Thursday, its shares were trading at a 56% discount to the value of its assets.

But despite its issues, Intu is a strong company with a number of major malls such as the Trafford Centre, Lakeside, St David’s, Metro Centre, Merry Hill and Cribbs Causeway.

It’s also one of the most proactive in adding new experiences to its properties with a raft of initiatives in recent periods. They include a giant sun that was installed at Trafford Centre in a bid to extend the summer and make people happier; tech that lets people compete in giant video games while they shop; indoor climbing walls; mental health drop-in sessions for students; and VR videogames.

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