Hammerson to buy Intu creating £21bn retail developer

Hammerson to buy Intu creating £21bn retail developer

Hammerson, which also owns the Bullring in Birmingham, has reached a deal with the shopping centre group, which also owns the Trafford Centre in Manchester, which Intu have said will create £21 billion pan-European portfolio - meaning they will be the largest United Kingdom group of this type.

"The cost of living squeeze on United Kingdom consumers from higher inflation is forcing companies like Hammerson and Intu into action", said Lawler.

The merged Intu and Hammerson group plans to sell at least £2bn of assets to strengthen its balance sheet and allow it to reinvest in other, higher return opportunities.

The merger of Hammerson and Intu will see the creation of Britain's largest property company with the new enlarged group boasting a combined gross asset value (GAV) of £21bn.

The deal represents a value of 253.9p per Intu share, equivalent to £3.4bn.

Mr Atkins described the United Kingdom retail market as "challenging" and said that there is a "polarisation" between the best and worst shopping centres.

What could not be agreed was whether this deal benefits Hammerson.

Shopping centre owner Hammerson has struck a deal to take over rival Intu in an acquisition worth £3.4bn.

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Hammerson also faces the risk an global third party could show interest in making a bid for Intu, the broker said.

John Strachan, chairman of Intu, said the deal between the two companies would "present a highly attractive proposition for retailers and shoppers in Europe's leading cities".

The combined group will be led by Mr Atkins and Hammerson chairman David Tyler.

"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", said Mr Atkins.

Hammerson estimates pre-tax cost synergies of about £25mln per year in the second year following completion of the takeover.

After the deal has been made, Hammerson shareholders will own approximately 55 per cent of the issued share capital in the new "Enlarged Group" while Intu shareholders will own the remainder.

Hammerson, a FTSE 100 company, has received backing from investors who hold 50.6% of Intu shares - including from Peel, the property firm founded by John Whittaker, now deputy chairman of Intu.

"We believe scale increasingly matters in retail REIT ownership and in this respect the combination makes sense and we would back Hammerson's management to deliver its targeted savings", Liberum said.

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