UK REIT Capital & Counties (Capco) has agreed a deal to complete its takeover of peer Shaftesbury, which will create a £3.5 bn (€4 bn) London-focused property firm with significant holdings in the West End.
Shaftesbury has a £2.2 bn market cap while Capco a £1.4 bn valuation. Together, the firms will vaunt some 2.9 million ft2 (270,000 m2) of space across Covent Garden, Carnaby, Chinatown, and Soho.
The combined portfolio will comprise around 1.8 million ft2 of retail and leisure space, and some 1.1 million ft2 of office and residential assets.
Under the proposed terms of the merger, Shaftesbury shareholders, excluding the Shaftesbury shareholding owned by Capco, will own 53% of the combined company, and Capco shareholders will own 47% of the combined company.
Capco currently owns around 97 million shares in Shaftesbury, representing approximately 25.2% of the existing share capital of Shaftesbury, including some 38 million shares currently held as security for Capco's exchangeable bond.
The combined company will be led by Shaftesbury's current chairman Jonathan Nicholls, continuing as chair of the new entity, while Capco boss Ian Hawksworth would take the CEO role.
Situl Jobanputra will be the CFO and Chris Ward will be the COO under current proposals. After 36 years at Shaftesbury, including 11 years as CEO, Brian Bickell has indicated he will retire on completion of the transaction.
Capco already signalled an interest in its peer when it bought a 26.3% stake in Shaftesbury priced at 540 pence per share in May 2020, as Hong Kong property billionaire Samuel Tak Lee exited his significant minority stake in the firm for £436 mln.
Executive directors Simon Quayle and Tom Welton, who have also been with the company for over 30 years, will also leave the business. Henry Staunton, chairman, and Jonathan Lane, non-executive director, will retire from the Board of Capco on completion.
Commenting on the merger, Henry Staunton, Chairman of Capco, said: ‘As the retiring Chairman of Capco, I am delighted by the prospects offered by the proposed merger with Shaftesbury to shareholders as London’s West End continues its recovery. I have every confidence in the ability of the combined management and Board of Shaftesbury Capital to deliver sustainable value growth for shareholders and benefits for broader stakeholders from its unique portfolio of properties.’
Jonathan Nicholls, Chairman of Shaftesbury, said: ‘The merger of Shaftesbury and Capco unites two complementary and adjacent real estate portfolios under single ownership. Shaftesbury Capital will own a first-class portfolio in some of the most iconic destinations across London’s vibrant West End. The experienced leadership team, with their impressive track record of innovation and curation, should ensure a sustainable and prosperous future for our destinations, the communities they serve and our wider stakeholders. With cost and operational synergies, a strong corporate governance framework, increased scale and greater equity market liquidity, the combination also provides a firm foundation for future value creation for our shareholders.’
