Merry Hill owner Intu faces possible takeover bid

A consortium including the Peel Group is considering a potential cash offer for Intu, the owner of 18 centres across the UK including Merry Hill, the Trafford and Arndale Centres in Manchester and Metrocentre in Gateshead.

The executive chairman of the Peel Group is its billionaire owner, John Whittaker, who is also deputy chairman at Intu. His Peel Group already owns around 26 per cent of Intu’s shares.

News of the possible bid sent Intu's shares soaring, up 30 per cent in early trading on Friday.

Intu was the subject of a takeover bid by rival Hammerson earlier this year in a deal set to create Britain's biggest property company, with £21 billion worth of assets across Europe.

The £3.4 billion deal was officially called off in late April after Hammerson – owner of Birmingham's Bullring and Grand Central – withdrew a recommendation for shareholders to vote through the acquisition.

At the same time Intu's share price has slumped by 40 per cent this year, making it a tempting takeover proposition

In an announcement after the close of trading on Thursday, Peel Group confirmed it had formed a consortium along with Saudi conglomerate Olayan Group and Canadian asset management company Brookfield.

A statement said: "The consortium's consideration of the possible offer is at a preliminary and exploratory stage and no approach has been made to the board of Intu."

Intu said it had not received an approach from the consortium, but added: "The board has formed an independent committee comprising all directors of Intu other than John Whittaker, who is connected to the consortium."

"The independent committee will consider any approach from the consortium, if made, and a further announcement will be made if and when appropriate."

The consortium has until November 1 to make a firm offer for Intu, whose share price fell 3.2 per cent to 148.5p on Thursday before news of the potential bid was confirmed.

Despite the months of distraction from the aborted Hammerson deal, Intu has ploughed ahead with its plans to spend around £100 million on improvements to the Merry Hill shopping centre, originally built by Black Country developers the Richardson family back in the 1980s.

But the recent decline in the UK's retail sector saw Intu revealing this summer that the value of the Merry Hill centre had been cut by £75m, with a sharp drop in the value of its centres nationwide seeing the group run up overall losses of a staggering £502m in just six months.

A huge £650m had been wiped from the value of the company’s shopping centres since the summer of 2017 as a string of retail chains shut stores or went out of business.

But Intu has underlined its commitment to invest in its centres UK wide, including plans to pump £100m into improving Merry Hill over the next few years with a new cinema and new restaurants in the pipeline. Around £15m is already committed to work at the centre while a 77,000 sq ft new Next store opened this summer on the centre’s former Sainsbury’s supermarket.

Firms such as JD Sports and River Island have doubled the size of their stores at Merry Hill, while Primark is to expand into the centre's former BHS and extend its store at Merry Hill by more than 70 per cent to 60,000 sq ft.

At 1.7m sq ft, intu Merry Hill is already classed as a major super regional shopping and leisure destination, attracting 21 million visitors a year.