CSC goes ahead with EUR 1.9bn mall deal despite Simon objection

UK listed Capital Shopping Centres Group (CSC) is proceeding with the largest ever single asset shopping centre acquisition in the UK despite objections from Simon Property Group, a shareholder and potential bidder for CSC.

On Thursday CSC said it had agreed to acquire Trafford Centre in Manchester from Peel Group for £747.6 mln in stock and the assumption of £852 mln of debt, whcih brings the total to about EUR 1.9 bn. However, Simon Property Group, which holds a 5.6% stake in CSC, has sent a letter to CSC, asking the company not to proceed with the acquisition and share placement until Simon had the opportunity to present a cash offer for CSC 'at an unspecified premium to NAV'.

CSC said that the letter did not contain any offer or indicative offer and the board of CSC had had concluded it was not in the interest of shareholders to delay the placing or acquisition. 'Shareholders in the company will have an opportunity to vote on the Acquisition at the extraordinary general meeting which is expected to be convened for 20 December. This has been communicated to Simon Property Group,' CSC said.

Peel Group is contributing £77 mln in cash in exchange for up to 167.3 mln shares in CSC and up to £209 mln in convertible bonds. The Trafford Centre is one of the UK's most successful retail and leisure destinations attracting 35 million customer visits annually. The centre comprises 176,000 m² of retail, catering and leisure space, including 18,000 m² at Barton Square, a major homeware and leisure extension.

CSC plans a share offering to help finance the deal. This would involve the placing up to 62.3 million shares, representing up to 9.9% of the company's existing shares, through an accelerated bookbuild process to be carried out by Merrill Lynch International and UBS.

Following the acquisition Peel will hold about 19.9% of CSC's enlarged share capital and 24.9% on conversion of the convertible bonds. John Whittaker, chairman of Peel, will join the CSC board as a non-executive director and deputy chairman.