Hammerson has struck a £3.4 billion deal to take over rival shopping centre rival Intu that will spawn the UK’s biggest retail and leisure property business.
It will see the likes of Intu’s Braehead leisure and retail site in Glasgow, its Lakeside shopping centre in Essex and the Hammerson-controlled Bullring in Birmingham come under one roof, creating a shopping centre giant worth £21bn.
Hammerson’s share price was hit after the stock exchange announcement as the all-share deal comes at a time when there is significant uncertainty around the UK commercial property sector due to Brexit.
But there were City supporters of the sector consolidation. Jonathan Buxton, partner and head of consumer and retail at Cavendish Corporate Finance, said: “Hammerson’s acquisition of Intu Properties demonstrates the rising popularity of supermalls in the UK and retailers’ desire to increase their presence across Europe.
“Alongside the broader shift online, UK consumers have begun moving away from high street retailers and toward supermalls, which according to GlobalData, are expected to see market growth of 7 per cent over the next five years.
“This deal will not only help Hammerson to become the dominant player in this space, but also signals their desire to expand outside the UK as it follows Intu’s recent acquisition of Xanadú in Madrid, a market that is primed for an upturn in consumer spending.
“As supermalls are expected to see continued growth, we expect to see similar acquisitions of this nature while also witnessing more retailers move away from city centres.”
The combined group will be led by Hammerson chief executive David Atkins and its chairman David Tyler.
Shareholders will vote on the deal next year, with Intu having already secured 50 per cent investor support. Intu’s shareholders will receive 0.475 shares in the new business for each of their Intu shares, a 28 per cent premium on Tuesday’s closing prices.
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.
Intu also operates the London’s Brent Cross centre.