Merry Hill owner Intu is bought in £3.4bn deal
Shopping centres group Hammerson is to takeover rival Intu, owner of the Merry Hill shops complex at Brierley Hill, in a £3.4 billion deal that will create Britain's biggest property company.
The boards of Hammerson, which owns The Bullring and Grand Central in Birmingham, and Intu, which also owns Lakeside and the Trafford Centre, Manchester, have agreed the all-share offer by Hammerson to buy all Intu shares.
Hammerson is also leading development of a new shopping complex on a 12-acre former foundry site on Bromford Road in Oldbury.
Today's deal will create a £21 billion shopping centres giant.
The offer represents a value of approximately 253.9p per Intu share, equivalent to £3.4 billion.
The combined group, which will be called Hammerson, will be led by Hammerson boss David Atkins and chaired by David Tyler.
John Whittaker, deputy chairman of Intu, will become deputy chairman of the enlarged group and John Strachan, chairman of Intu, will join the board of the enlarged group as senior independent director.
The group overall will have six directors nominated by Hammerson and four directors nominated by Intu.
Hammerson will continue to use the "intu" consumer brand within its shopping centre portfolio.
Shareholders will vote on the deal next year, with Intu having already secured 50 per cent of investor support for the all-paper deal.
Hammerson said it had carried out "a detailed preliminary assessment" of the combined portfolio and has identified at least £2 billion of disposals from across both portfolios, primarily within the UK.
It is concentrating on intu's biggest sites, such as Manchester's Trafford Centre, Lakeside in, Essex; and Gateshead's Metrocentre. Intu has pledged £100m to improve Merry Hill, after completing its £800m takeover last year, and in presentations to the City today Hammerson has underlined Merry Hill's place in its future development pipeline
Mr Tyler said: "This transaction will deliver real value for shareholders.
"The financial strength of the enlarged group and its strong leadership team will make it well-placed to take advantage of higher growth opportunities on a pan-European scale."
The groups plan to slash costs, offload at least £2 billion worth of assets and target high growth markets such as Spain and Ireland.
Mr Strachan said: "A combination of both Intu and Hammerson will create a more resilient, diversified and stronger group that we believe will benefit all our stakeholders.
"Intu offers high-quality retail and leisure destinations in the UK and Spain, which when merged with Hammerson's own top-quality assets in the UK, in France and in Ireland, present a highly attractive proposition for retailers and shoppers in Europe's leading cities. I am proud of the financial and operational success that Intu's management team has delivered and pleased to see that the intu brand will continue."
The acquisition will result in Hammerson shareholders owning 55 per cent of the combined firm and Intu investors the remainder.
Mr Atkins added: "This marks an exciting milestone in the history of Hammerson. Bringing together the high-quality portfolios of both companies establishes Hammerson as a larger, leading European retail REIT, enhances shareholder returns and supports opportunities for long-term growth.
"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. I hold Intu's high-quality centres in high regard and I look forward to working with a strengthened team to enhance the performance of our entire portfolio."
In August Intu completed a £488 million refinancing deal to enable its full ownership of Merry Hill, where is is planning a new cinema and restaurants.
Intu originally bought a 50 per cent stake in Merry Hill, the seventh largest UK shopping centre, in March 2014 for £408m from Westfield. Queensland Investment Corporation retained the other half until intu agreed to acquire the remaining 50 per cent last year in a £410m deal.
