Commercial Property

Hammerson shares slump as Klepierre walks away from deal

Owner of Ilac Centre and Swords Pavilions said bid undervalued company

Hammerson is a part-owner of Dundrum town centre. Photograph: Matt Kavanagh/The Irish Times

Fri Apr 13 2018 - 11:17

French shopping centre operator Klepierre has abandoned a £5 billion (€5.78 billion) bid for Hammerson, accusing the British property company of failing to provide "meaningful engagement" over a potential deal.

Shares in the London-listed company, which part-owns the Dundrum Town Centre, the Ilac Centre in Dublin and the Pavilions in Swords, were down 11 per cent at 461 pence in early trade, erasing most of their gains since Klepierre made its original approach in March. Shares in Paris-based Klepierre were up 1.5 per cent.

Klepierre's decision to drop its takeover attempt leaves the company free to pursue its own acquisition of fellow London-listed shopping centre operator Intu Properties.

Announced last December, Hammerson’s deal with Intu had been met by scepticism from Hammerson investors as it increased the company’s already high exposure to a squeezed UK retail sector.

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Takeover proposal

Klepierre's decision to scrap its unsolicited bid comes after its chairman Jean-Marc Jestin met Hammerson counterpart David Tyler on Monday evening to make an improved takeover proposal of 635 pence a share, split equally in cash and stock.

Hammerson had rejected the sweetened proposal on Wednesday, saying it was only a marginal increase on Klepierre’s initial bid of 615p and still undervalued the company.

That represented a premium of 45 per cent to Hammerson’s share price on March 16th, the day before the French company disclosed its initial approach, Klepierre said.

For Klepierre, a successful acquisition of Hammerson would have given it shopping centres in the UK and Ireland, countries where the French firm currently does not have a presence.

It would have come as part of a wave of consolidation in the malls sector, as retailers grapple with competition from online competitors such as Amazon.

British retailers have been suffering as inflation-hit British consumers cut back on spending, making many investors wary of the sector.

Toys R Us UK and electronics retailer Maplin entered administration at the end of February, while shares in early-years retailer Mothercare have recently slumped to an all-time low. – Reuters

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