Secret bid for Hammerson

Hammerson, which owns or has stakes in shopping centres including the Bullring in Birmingham, is understood to have rejected the offer from Klépierre immediately

Deirdre Hipwell, M&A Editor
The Times

One of Europe’s largest owners of shopping centres has made a £5 billion takeover approach for Hammerson in a move that threatens to derail the British property company’s proposed merger with Intu, The Times can reveal.

[post_ads]Klépierre, which owns more than 100 shopping centres across the Continent, contacted Hammerson a fortnight ago about a proposed takeover but was rebuffed almost immediately. The Times understands that Jean-Marc Jestin, chairman of Klépierre, made the approach directly to David Tyler, chairman of Hammerson, with an offer that is thought to have included both shares and cash. Sources in the property market have suggested that Klépierre has proposed a deal that could present a premium of more than 30 per cent to Hammerson’s share price.

Hammerson is believed to have rejected the offer almost immediately, arguing that it undervalued a group that owns or has stakes in some of the best centres in Britain, including the Bullring in Birmingham.

Klépierre’s interest in Hammerson could scupper a plan that the company, led by David Atkins, has to merge its operations with another rival. Mr Atkins surprised the market in December when he announced that Hammerson had struck a recommended £3.4 billion all-stock deal to merge with Intu. If that deal went ahead it would create an enlarged group with a £21 billion pan-European portfolio of retail and leisure property. Hammerson shareholders would own 55 per cent, with the rest owned by Intu investors.

Some market experts have criticised the proposed deal between Hammerson and Intu as lacking inspiration, pointing out that it increases Hammerson’s exposure to a tough retail sector in Britain. The deal also comes with a £40 million one-off integration cost and significant capital expenditure could be required at some of Intu’s centres.

Klépierre is understood to be keen to make a move before any possible deal with Intu, which would only complete by the end of this year. The real estate investment trust, based in Paris, focuses on the ownership, management and development of shopping centres in 16 countries across Europe. It does not have a presence in Britain and a swoop on Hammerson could mark its debut in the highly developed retail market.

[post_ads]Klépierre is focusing on prime centres, which bring in the most visitors and the best retailers, and has more than 100 malls across Europe attracting more than one billion visitors each year. If it joined forces with Hammerson, which owns a large centre in Marseille, the group would have a combined portfolio of €36 billion. Since Klépierre launched a turnaround about six years ago — in which it sold off some centres and rebalanced its portfolio to focus on affluent urban areas and centres — its performance has been improving. Last year it reported “intense” leasing activity, with 1,864 deals signed, up 8 per cent year on year. Its cash flow this year is forecast to be in the range of between €2.57 and €2.62 a share, which is at the higher end of the range and would represent growth of 5.6 per cent.

Klépierre has experience in large acquisitions, most recently taking over Corio, the biggest listed property company in the Netherlands, in 2014 in a €7.2 billion deal. Klépierre also counts Simon Property Group — the largest operator of malls in the US — as its biggest shareholder.
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The North American operator tried to take over Intu in 2011 but walked away after the group carried out an £863 million all-share tie up with John Whittaker’s Peel Group, which owns the Trafford Centre.