A consortium led by John Whittaker has scrapped its bid for shopping centre owner Intu, blaming macroeconomic “uncertainty” and “potential near-term volatility” in financial markets.
According to a statement from Intu, the consortium said that, as a result of the turbulent landscape, it was “not able to proceed with an offer within a timeframe which is manageable within the confines of the code timetable”.
It had been handed three extensions to a put-up-or-shut-up deadline, which was due to expire at 5pm tomorrow.
Despite the collapse of the potential deal, Whittaker insisted his company, Peel Group, would remain “fully committed” to Intu “as a long-term, strategic shareholder”.
He added: “Intu’s portfolio of super-regional and prime city centre shopping centres is trading strongly and benefiting from the retailer store rationalisation process that is currently under way in the UK.
“Physical retail continues to play a key role in all successful multi-channel retailer sales strategies and Intu’s national portfolio of centres enjoys some of the highest customer footfall in the country.”
As previously reported, Whittaker was leading the takeover offer with backing from Saudi Arabia’s Olayan and Canadian property investor Brookfield Asset Management.
The group’s indicative cash proposal of 215p per share – including a 4.6p dividend – valued Intu at £2.9bn, less than the £3.4bn Hammerson had been willing to pay before it pulled the plug on the deal in April.
Whittaker’s consortium had completed due diligence during the protracted talks and Intu insisted “nothing had arisen” from the process that would have led it to alter the terms of the proposed deal.
But a firm takeover offer has ultimately been deemed unviable in the wider economic climate.
Intu – the subject of a takeover bid from rival Hammerson last year, which was also canned – insisted that, although “market sentiment towards retail and retail property remains negative”, it remains “confident of its commercial prospects”.
The business operates a £9.6bn portfolio of shopping centres, including Lakeside in Essex, Manchester’s Trafford Centre and the Metrocentre in Newcastle.
Intu said it would “continue to invest for the long term in its winning destinations” despite the consortium withdrawing its bid.
In October, Intu said rental income in the first six months of 2018 was up 1.3% on a like-for-like basis to £223m.
But it said today that net rental income growth would increase no more than 1% in its full year on a like-for-like basis.
However, that excludes the impact of the impending closure of four House of Fraser stores.
Mike Ashley, which acquired the department store business out of administration in the summer, revealed earlier this month that he had failed to reach agreement with Intu on new leases. As a result, he will shutter all four House of Fraser stores in Intu’s portfolio.