Simon's CSC offer hangs in balance

SIMON Property Group, the US mall owner, will be hard-pressed to put together a formal offer for UK target Capital Shopping Centres before Wednesday's regulatory deadline, according to City sources.

Analysts believe its offer of 425p, valuing CSC at 2.9 billion will have to be closer to 500p to have any chance of success, though that falls short of the 625p per share or 4.3bn that CSC believes it is worth.

"It is a really big challenge for Simon Property Group to get themselves together in the time they have got left," said Andrew Allen, retail property analyst at Oriel Securities.

In a note to investors, Michael Burt of Execution Noble raised the same point, saying there was "no scope" for a recommended offer emerging before the "put up or shut up" deadline. His comments were issued on Friday in the wake of CSC announcing revised terms for its purchase of Manchester's Trafford Centre from Peel Group.

"Any worthwhile approach (from Simon] may need to be close to 500p, which feels unlikely given that Simon has not received the due diligence information it has claimed it required to make an offer," Burt added.

CSC agreed in late November to buy the Trafford Centre from John Whittaker's Peel Group, a move that sparked Simon into offering to buy CSC. Simon, which owns more than 5 per cent of CSC's shares, has said it will not make a formal offer if the deal for the Trafford Centre goes through.

CSC's new terms for the Trafford Centre will see it issue fewer shares to Peel but at 400p each, rather than the initial 368p. The smaller share transfer would give Peel control over 23.3 per cent of CSC's equity, against 24.7 per cent previously.