London-listed Hammerson is acquiring Intu Properties in a deal that is expected to create a £21bn (€23.8bn) pan-European retail real estate investment trust (REIT).
Hammerson said it will buy the UK shopping centre owner at a 27.6% premium to Wednesday’s share price by offering shareholders 253.9p per share, giving Intu a market value of £3.4bn. Hammerson has a market capitalisation of £4.2bn.
Following the acquisition, Intu shareholders will receive 0.475 new Hammerson shares for each Intu share held.
The merger brings together two of Europe’s largest listed owners of European retail property. They own two of the largest shopping centres in the UK: Hammerson owns Birmingham’s Bullring and Intu owns Manchester’s Trafford Centre.
Hammerson said it would pursue a “rationalisation” of the enlarged portfolio by selling at least £2bn of assets.
“This will both strengthen its balance sheet and provide liquidity to reinvest in higher return opportunities,” it said.
The combined group, which will maintain the Hammerson name, will be led by Hammerson CEO David Atkins, and Hammerson CFO Timon Drakesmith.
David Tyler, the chairman of Hammerson, will be the chairman of the new group. John Whittaker, deputy chairman of Intu, will take on the role of deputy chairman of the enlarged group and John Strachan, chairman of Intu, will join the board as senior independent director.
Atkins said: “This marks an exciting milestone in the history of Hammerson. Bringing together the high-quality portfolios of both companies establishes Hammerson as a larger, leading European retail REIT, enhances shareholder returns and supports opportunities for long-term growth.
“The acquisition creates a leading pan-European platform of desirable retail and leisure destinations which are better positioned to serve the needs of our retailers, excite our customers and support our partners and communities.”
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.”
Strachan said: “A combination of both Intu and Hammerson will create a more resilient, diversified and stronger group that we believe will benefit all our stakeholders.”
Hammerson also said it was selling Saint Sébastien shopping centre in France for €162m to AEW Ciloger on behalf of SCPI Laffite Pierre and Actipierre Europe.
The sale amount is slightly below 30 June book value, it said. Hammerson acquired its stake in Saint Sébastien in 2014 for €130m.
The property, which has a total of 24,000sqm gross leasable area occupied by 105 retailers, is 95% let.
Atkins said: “I am also pleased to report that following this sale, we have exceeded our 2017 target of £400m disposals as part of our capital recycling strategy.”