Mega-merger between Merry Hill and Bullring owners hangs in the balance

Shopping centre operator Hammerson, owner of the Bullring and Grand Central in Birmingham, had agreed a £3.4bn tie-up with Intu, owner of Merry Hill and the Trafford Centre in Manchester, but it could be derailed if Kelpierre comes up with a better offer in the next fortnight.

Hammerson said in a trading statement that while Klepierre's position "remains unclear", the board does "not intend to finalise shareholder documents in relation to the proposed acquisition of Intu".

Hammerson has branded Klepierre's £4.88 billion cash-and-shares offer "wholly inadequate" and "entirely opportunistic", but the French firm has until April 16 to "put up or shut up" with a formal offer under UK takeover rules.

Hammerson still wants to go ahead with an all-share takeover of rival Intu, which would create Britain's biggest property company with £21 billion worth of assets across Europe.

Intu operates the Lakeside in Essex and the Potteries in Stoke on Trent, while Hammerson owns the Bicester Village and Brent Cross shopping centres.

Meanwhile, despite the general slowdown on the high stree and the impact of the recent bad weather and a string of store chain collapses, including Malpin and Toys R Us, Hammerson said its big shopping centres were attracting even more visitors.

While UK retails sales were down two per cent in the first three months, Hammerson said that its shopping centres outperformed the market with Bicester Village delivering a double-digit increase in the period.

Footfall at Hammerson's UK centres was up 0.5 per cent over the quarter, said Hammerson chief executive David Atkins. "The Easter trading weekend again demonstrated that not all retail is equal with our centres delivering positive footfall growth of five per cent compared to average reported Easter footfall across all shops of minus 2.4%."

The group also flagged a £3.5 million hit to net rental income from the wave of retail restructurings and administrations that have afflicted the sector, including Toys R Us and New Look.

David Atkins said: "Whilst we recognise the difficult trading environment and challenges felt by many retail and restaurant formats in the UK, there continues to be good demand for space across our centres."

A highlight so far this year is the planned opening of a new Arket store at the Bullring, Arket is H&M's latest Nordic-inspired fashion offer and this will be its first store outside the South East.

The value of Hammerson's assets rose 0.3 per cent to over £10.5 billion and the firm said it would offload £500 million worth of properties over the year.