Capco acquires 26.3% stake in Shaftesbury for £436 million

LONDON-based Capital & Counties Properties (Capco) has acquired a 26.3 percent shareholding in Shaftesbury plc to be paid across two tranches for a total price of £436 million (R9.43 billion).

The acquisition works out at 540 pence per Shaftesbury share, representing a discount of 13.9 percent to the closing Shaftesbury share price on May 29, 2020, an announcement said yesterday.

Capco’s share price rose 6.67 percent to close at R37.56 on the JSE yesterday, following the announcement.

The stake was being bought from a family trust established by Hong Kong billionaire Samuel Tak Lee.

Capco said the deal was an opportunity to buy a stake in “an exceptional mixed-use real estate” portfolio, adjacent to Capco’s Covent Garden estate.

The price was attractive relative to historical levels and the board’s view of the future long-term prospects for prime central London.

Capco maintained a strong balance sheet with access to significant liquidity – on a pro forma basis, as at March 31, the investment resulted in a loan-to-value of 30 percent, with £525m of cash and undrawn committed facilities.

Capco chief executive Ian Hawksworth said as long-term investors in the Covent Garden estate and the West End, the transaction was expected to generate long-term value for Capco shareholders.

“While we can expect continued market uncertainty in the near term, we are confident about the long-term fundamentals and prospects for the West End and prime central London,” he said.

The acquisition of 64.4 million shares for £348m in cash, representing 20.9 percent of Shaftesbury’s shares, was expected to complete by tomorrow. Completion of a subsequent tranche of 16.3 million shares for £88m in cash, representing 5.3 percent of Shaftesbury’s shares, was conditional on Capco shareholder approval.

“While Covid-19 has had a significant impact on the group’s customers and business in the near term, the board continues to believe in the longterm fundamentals of prime central London and the West End,” Capco’s board said.