Bid talks add £550million to shopping centre giant

SHOPPING centre owner Intu saw its value rise by £550m after a billionaire property tycoon outlined plans for a takeover.

The firm, which owns some of the UK’s biggest shopping centres such as Lakeside in Essex and the Trafford Centre in Manchester, is in John Whittaker’s cross hairs.

The 76-year-old – who is deputy chairman of Intu and has a stake of around 27pc through his company Peel Group – has joined forces with Brookfield Property Group of Canada and Saudi Arabia’s Olayan Group to plot a takeover.

Six months ago, rival shopping centre owner Hammerson abandoned plans for a £3.4bn takeover of Intu.

Yesterday Intu shares jumped 37pc in early trading, valuing the company at £2.8bn. The stock later closed up 27.2pc, or 40.5p, at 189p – raising its value by £550m to £2.6bn. But this is still some £800m below what Hammerson was offering.

But analysts said the renewed bid interest in Intu was a vote of confidence in the UK retail sector at a time when thousands of stores are being shut on the High Street as shoppers go online.

James Child, retail analyst at EG, said: ‘The long-standing narrative that retail is dead is a fallacy which has been disproved by this mooted move.

‘Despite this year being tumultuous for individual retail chains, we have already seen the validation from investors that there is still room on their books for prime retail assets. There is still huge value at the top end of retail and, with prime retail schemes continuing to evolve they are a safe bet for the future.’

The plans gave other property firms a boost with shares in Land Securities and British Land up 1pc and 1.5pc respectively.

Hammerson, which owns Bicester Village and the Birmingham Bullring, also rose 2.4pc, or 12.1p, to 440.4p.

Hammerson’s plans to swoop for Intu were ditched earlier this year due to shareholder opposition, in an embarrassing climb down for both firms.

Intu chief executive David Fischel, 60, quit after 33 years at the company. Its shares have been hammered this year, falling by 40pc as it swung to a £503m loss in the first half of 2018.

The shopping centre owner has struggled with lower growth in retail income as businesses such as fashion chain New Look and restaurant group Prezzo close sites and battle for lower rents on others. Although a takeover would likely be a lifeline for Intu, a deal is expected to be substantially lower than the company’s overall value including its assets.

Peel and Olayan together already hold almost 30pc of Intu.

Analysts at Liberum warned that any bid for Intu warranted ‘ serious consideration’ by its shareholders. Retail analyst Nick Bubb added: ‘ At this level – despite the near £5bn of debt and the pressure on rental values – you’d think that buying Intu was a pretty cheap way into its two flagship assets, the Trafford Centre in Manchester – valued at £2.2bn gross – and Lakeside – valued at £1.3bn gross.’

And analysts at Peel Hunt suggested the consortium’s existing shareholding gave it an opportunity to take Intu private, allowing it to deal with the firm’s issues away from the public glare.

They said: ‘An offer at 190p to 200p per share may therefore provide the consortium with potential upside, but would it be attractive enough for the remaining Intu shareholders?’

The consortium has until 5pm on November 1 to make a formal offer for Intu or walk away.

Hammerson has pocketed £236m after selling a 50pc stake in Leicester shopping centre Highcross through a joint venture with an Asian investor.

The firm will continue to manage the centre, which attracts 18m visitors a year and is home to the likes of John Lewis and Debenhams.