Braehead owner rejects £2.9bn US bid as row grows over Trafford deal

THE owner of the Braehead shopping centre yesterday rejected a £2.9 billion offer for the company from major US shareholder Simon Property.

• CSC owns Braehead but its bid for the Trafford centre in Manchester led to a dispute with a major US shareholder. Picture: Robert Perry

But Capital Shopping Centres (CSC), whose portfolio also includes the giant Lakeside and Metro developments, has agreed to delay a vote on another deal that would have reduced Simon's current stake.

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The US firm's indicative offer of 425p per share came amid rekindled interest among property investors for UK centres, expected to rise in value as the economy stages a tentative recovery.

Simon - the biggest US shopping complex owner with 373 properties in North America, Europe and Asia - said the offer was at a 16 per cent premium to the price of shares CSC plans to issue to buy Manchester's sprawling Trafford Centre in a deal announced 25 November.

The US company had urged shareholders to oppose the deal at an EGM vote on 20 December.

In a statement, CSC's board said it unanimously rejected the offer from its 5.1 per cent shareholder, adding it "is yet another attempt by Simon to frustrate the Trafford Centre acquisition without putting forward a proper proposal for CSC shareholders to consider as an alternative".

It went on: "Notwithstanding this, the board has concluded it appropriate to adjourn the EGM to ensure CSC's shareholders are provided with the necessary information about the proposal to make a clear decision."

CSC has spurned two other Simon proposals.

UK billionaire John Whittaker's Peel Group is set to take a near-20 per cent stake in CSC by selling the Trafford to it for 1.6bn.

Peel said on Monday that the deal was for a long-term investment in CSC, not for cash.

Whittaker would become CSC's deputy chairman and its largest shareholder, potentially complicating future attempts by Simon to buy it.

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CSC, whose shares gained 5 per cent, said the EGM is now likely in late January, and that its advisers are in talks with the UK Takeover Panel to establish a latest date by which Simon must make a formal offer.

Michael Burt, an analyst at Execution Noble, said: "Although the delay will be a frustration for Peel it has little alternative but to sit and wait given an absence of alternative bids."

JP Morgan analyst Harm Meijer added: "We believe Simon will 'test the market' over the coming days and will realise that its indicative offer is not enough… another rabbit out of the hat is needed, but it needs to be a big one."

Simon, which in May walked away from its $6.5bn bid for US rival General Growth Properties, is sitting on $1.3bn of cash and had access to an additional $3bn credit facility at end-September.

As early as August 2008, Simon was named as a likely bidder for CSC's predecessor, Liberty International, in which Simon was building a stake. Liberty de-merged this in May to form two listed companies, including CSC.

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