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| Version 2 | Version 3 |
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| Hammerson snaps up shopping mall rival to become UK's top property firm | Hammerson snaps up shopping mall rival to become UK's top property firm |
| (about 1 month later) | |
| Intu merger deal makes Brent Cross and Bullring owner a £21bn company as it expands shopping centre empire | |
| Angela Monaghan and | |
| Sarah Butler | |
| Wed 6 Dec 2017 12.32 GMT | |
| Last modified on Fri 8 Dec 2017 10.59 GMT | |
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| The owner of Birmingham’s Bullring shopping centre has agreed to buy the company behind Manchester’s Trafford centre in a deal that will create Britain’s biggest property company worth £21bn. | The owner of Birmingham’s Bullring shopping centre has agreed to buy the company behind Manchester’s Trafford centre in a deal that will create Britain’s biggest property company worth £21bn. |
| Hammerson, which also owns the Brent Cross shopping centre in London, is acquiring smaller rival Intu in a £3.4bn deal that highlights the increasingly tough retail environment. | Hammerson, which also owns the Brent Cross shopping centre in London, is acquiring smaller rival Intu in a £3.4bn deal that highlights the increasingly tough retail environment. |
| The trend for online shopping is prompting many retailers to close stores and focus their property portfolio on the top tier of the most popular malls. | The trend for online shopping is prompting many retailers to close stores and focus their property portfolio on the top tier of the most popular malls. |
| Rents in the premium shopping centres are holding up or rising, while less popular malls and some high streets are struggling to survive. Marks & Spencer, Debenhams and Toys R Us have all announced plans to close stores this year while the collapse of BHS last year has also left shops empty. | Rents in the premium shopping centres are holding up or rising, while less popular malls and some high streets are struggling to survive. Marks & Spencer, Debenhams and Toys R Us have all announced plans to close stores this year while the collapse of BHS last year has also left shops empty. |
| The cost of living squeeze caused by inflation outpacing wage growth has forced companies such as Hammerson and Intu into action, according to Jasper Lawler, head of research at London Capital Group. | The cost of living squeeze caused by inflation outpacing wage growth has forced companies such as Hammerson and Intu into action, according to Jasper Lawler, head of research at London Capital Group. |
| “Online shopping means shopping centres and high street shopping are in a long-term malaise,” he said. “Shareholders will want to see assets sold down in the merged company to help fund the deal and to reflect the lower demand for bricks and mortar stores.” | “Online shopping means shopping centres and high street shopping are in a long-term malaise,” he said. “Shareholders will want to see assets sold down in the merged company to help fund the deal and to reflect the lower demand for bricks and mortar stores.” |
| The merged Intu and Hammerson group plans to sell at least £2bn of assets to strengthen its balance sheet and allow it to reinvest in other, higher return opportunities. | The merged Intu and Hammerson group plans to sell at least £2bn of assets to strengthen its balance sheet and allow it to reinvest in other, higher return opportunities. |
| Analysts said the merged company was likely to focus efforts on its supermalls, where shoppers and retailers most want to be. The new group will own 12 of the country’s 20 supermalls, including Birmingham’s Bullring and Manchester’s Arndale centre, according to retail analyst GlobalData. | Analysts said the merged company was likely to focus efforts on its supermalls, where shoppers and retailers most want to be. The new group will own 12 of the country’s 20 supermalls, including Birmingham’s Bullring and Manchester’s Arndale centre, according to retail analyst GlobalData. |
| “As clothing and footwear retailers focus on supermalls to create large-scale, experience-led stores, physical retail spend will move away from town centres towards destination shopping centres, ensuring supermall space is hot property,” said Sofie Willmott, senior retail analyst at GlobalData. | “As clothing and footwear retailers focus on supermalls to create large-scale, experience-led stores, physical retail spend will move away from town centres towards destination shopping centres, ensuring supermall space is hot property,” said Sofie Willmott, senior retail analyst at GlobalData. |
| “The proposed deal will net the group a stake in almost 60% of all UK supermall space, making it a force in the retail landscape, well placed to benefit from retail spend shifting across locations.” | “The proposed deal will net the group a stake in almost 60% of all UK supermall space, making it a force in the retail landscape, well placed to benefit from retail spend shifting across locations.” |
| Hammerson, which also owns Bicester Village, will pay 253.9p a share in a deal that values Intu at £3.4bn. | Hammerson, which also owns Bicester Village, will pay 253.9p a share in a deal that values Intu at £3.4bn. |
| It will hand Hammerson Intu’s porfolio of shopping centres in the UK and Spain, including Lakeside in Essex and the Metrocentre in Gateshead. Hammerson also owns property in Ireland and France. | It will hand Hammerson Intu’s porfolio of shopping centres in the UK and Spain, including Lakeside in Essex and the Metrocentre in Gateshead. Hammerson also owns property in Ireland and France. |
| John Strachan, chairman of Intu, said the deal between the two companies would “present a highly attractive proposition for retailers and shoppers in Europe’s leading cities”. | John Strachan, chairman of Intu, said the deal between the two companies would “present a highly attractive proposition for retailers and shoppers in Europe’s leading cities”. |
| He added: “A combination of both Intu and Hammerson will create a more resilient, diversified and stronger group.” | He added: “A combination of both Intu and Hammerson will create a more resilient, diversified and stronger group.” |
| The combined group will retain the Hammerson name and be led by the firm’s chief executive, David Atkins. He said the deal would strengthen its portfolio and opportunities for growth, including in Spain and Ireland, two of Europe’s fastest growing economies. | The combined group will retain the Hammerson name and be led by the firm’s chief executive, David Atkins. He said the deal would strengthen its portfolio and opportunities for growth, including in Spain and Ireland, two of Europe’s fastest growing economies. |
| “The acquisition creates a leading pan-European platform of desirable retail and leisure destinations which are better positioned to serve the needs of our retailers, excite our customers and support our partners and communities,” Atkins said. | “The acquisition creates a leading pan-European platform of desirable retail and leisure destinations which are better positioned to serve the needs of our retailers, excite our customers and support our partners and communities,” Atkins said. |
| Shares in Hammerson closed down more than 6% at 501.5p, while Intu shares were up nearly 14% at 226p. On Tuesday, the day before the deal was announced, Intu shares had fallen 27% since the beginning of the year. | Shares in Hammerson closed down more than 6% at 501.5p, while Intu shares were up nearly 14% at 226p. On Tuesday, the day before the deal was announced, Intu shares had fallen 27% since the beginning of the year. |
| Hammerson said it expected the deal to generate £25m of annual pre-tax savings by the end of the second year, as a result of lower office costs and by combining support functions such as IT and digital operations. The company expects a one-off cost of about £40m as the two businesses are integrated. | Hammerson said it expected the deal to generate £25m of annual pre-tax savings by the end of the second year, as a result of lower office costs and by combining support functions such as IT and digital operations. The company expects a one-off cost of about £40m as the two businesses are integrated. |
| The deal would result in Hammerson shareholders owning about 55% of the enlarged company, with the remaining 45% owned by Intu shareholders. | The deal would result in Hammerson shareholders owning about 55% of the enlarged company, with the remaining 45% owned by Intu shareholders. |
| Hammerson, a FTSE 100 company, has received backing from investors who hold 50.6% of Intu shares – including from Peel, the property firm founded by John Whittaker, currently deputy chairman of Intu. Whittaker will retain the same role in the combined company. | Hammerson, a FTSE 100 company, has received backing from investors who hold 50.6% of Intu shares – including from Peel, the property firm founded by John Whittaker, currently deputy chairman of Intu. Whittaker will retain the same role in the combined company. |
| David Tyler, chairman of Hammerson, will become chairman of the new company. | David Tyler, chairman of Hammerson, will become chairman of the new company. |
| Hammerson | |
| Intu Properties | |
| Mergers and acquisitions | |
| Real estate | |
| Retail industry | |
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