Growing risks in retail sector giving investors cause for concern, says developer
Hammerson has pulled the plug on its proposed 拢3.4bn takeover of rival shopping centre developer Intu, blaming increasingly tough trading conditions in the UK retail industry for the move.
Hammerson had announced plans to buy Intu, which owns the Trafford Shopping Centre in Manchester, last December.
At the time Hammerson chairman David Tyler had claimed the combined entity would be 鈥渨ell-placed to take advantage of higher growth opportunities on a pan-European scale鈥�.
But the recent downturn in the sector prompted a re-think, the group has admitted.
In a statement Hammerson, currently revamping the Brent Cross shopping centre at a cost of 拢1.4bn and due to redevelop the Whitgift centre (pictured) in Croydon with the Westfield group, said the equity market was 鈥渁ware of a heightened level of risk鈥� associated with the UK retail property sector.
鈥淚t is also apparent from extensive engagement with shareholders, in particular in recent weeks, that there is a wide range of views on the merits of the Intu acquisition.
鈥淎s a result, the board of Hammerson has concluded that the heightened risks associated with the [deal] outweigh the long-term rewards that can be expected in comparison to other strategic options open to the company,鈥� it said.
When it announced the proposed deal back in December Hammerson said it would result in its shareholders owning 55% of the new group, with Intu shareholders taking 45%.
It envisaged annual cost savings of around 拢25m kicking in two years after the takeover went through, with one-off integration costs of around 拢40m and at least 拢2bn in disposals from the combined firm鈥檚 portfolio.
After today鈥檚 announcement Hammerson shares were trading 4% higher at 514p.
No comments yet