Shops deal is shuttered
Malls merger is off amid fears for retail sector
THE high street carnage has killed off a £21billion mega deal between two of Britain’s biggest shopping centre owners.
Hammerson, the firm behind Birmingham’s Bullring and London’s Brent Cross shopping malls, yesterday ditched its £3.4bn offer for smaller rival Intu.
Bosses blamed the deteriorating state of the retail sector.
Hammerson said: “Over the last five months, the financial strength of retailers and other tenants in the UK has softened and a number of retailers have entered into administrations or CVAs (company voluntary arrangements), while consumer confidence has also remained subdued.”
However, its decision was slammed by Intu, which owns shopping centres across the UK and Spain, including Lakeside in Essex, Manchester’s Trafford Centre and Newcastle’s Metrocentre.
The company branded Hammerson’s reasons “unsatisfactory”, given its suitor said just weeks ago that it remained “fully committed” to the deal. Shares in Hammerson jumped 4% but Intu’s slumped 4% on the back of the announcement. The deal with Intu was set to create Britain’s biggest property company, with £21bn worth of assets across Europe. French shopping centre firm Klepierre walked away from a potential deal with Hammerson last week. Sofie Willmott, senior retail analyst at GlobalData, said: “Hammerson is unwilling to expose itself to the potential of retailers closing stores in Intu’s shopping centres at the price it settled on five months ago. “Although many retailers have plans to trim down their store portfolio this year in response to lacklustre physical sales, rising operating costs and spend shifting online, it is unlikely that shopping centre stores will be the ones they choose to close given the destination appeal of these locations. “Retailers such as Zara, H&M and River Island are prioritising their shopping centre locations and upsizing their stores in supermalls.”