Shopping centre landlord Intu, whose portfolio includes Braehead in Glasgow, has seen a consortium of investors up its takeover approach, valuing the company at around £2.8 billion.
Peel Group, the Olayan Group and Brookfield Property Group revised an initial proposal made on 11 October of 205p per share up to 215p, following engagement with Intu’s directors. Peel Group, which is owned by Intu deputy chairman John Whittaker, already holds a 26 per cent stake in the company.
The consortium, which on 4 October announced that they were in the preliminary stages of considering a possible cash offer for the company, will now be granted access to company documents for due diligence as it considers whether to make a firm offer.
A decision must be made by 1 November.
The current proposal would be reduced by any dividends paid by Intu prior to the completion of the deal, meaning the actual offer would be 210.4p per share or less.
David Brockton, analyst at Liberum, said: “We struggle to see how the Intu board will be able to recommend a cash offer below 239p.
“Management has repeatedly maintained that its prime retail assets are resilient and trading well with negligible impact from wider occupier weakness.”
The latest proposed acquisition price values the company at significantly less than rival retail property giant Hammerson considered paying for Intu before it abandoned a £3.4bn approach in April.
Hammerson – whose properties include Glasgow’s Silverburn, Abbotsinch Retail Park in Paisley, and Union Square in Aberdeen – said at the time that the tie-up was “no longer in the best interest of shareholders”.
It added that over the previous five months, “the financial strength of retailers and other tenants in the UK has softened and a number of retailers have entered into administrations or CVAs, while consumer confidence has also remained subdued”.
French group Klepierre had shortly before walked away from a potential deal with Hammerson, after holding a meeting with its takeover target to table a £5bn proposal.
But Klepierre said it would not make a formal offer because Hammerson “did not provide any meaningful engagement”, while Hammerson had branded Klepierre’s overtures “wholly inadequate” and “entirely opportunistic”.
Intu, whose other sites include the Metrocentre in Newcastle and Trafford Centre in Manchester, in July issued its interim results to 30 June, swinging to a pre-tax loss of £503.4 million from a profit of £203.3m 12 months previously.
Boss David Fischel said then that Intu sites “have remained prime because we have always adapted and responded vigorously to the ever changing retail environment with continued investment and creative asset-management.”