A consortium led by the biggest investor in Intu Properties has scrapped a 2.9 billion-pound bid for the shopping centre owner, the second time in less than a year a takeover for the company has collapsed, sending its shares to a record low.
Peel Group, which is the investment vehicle of Intu’s deputy chairman and major investor John Whittaker, Canada’s Brookfield Asset Management and Saudi Arabia’s Olayan Group said that macroeconomic uncertainty and potential market volatility meant they could not submit an offer for the London-listed business within the timetable set by Britain’s Takeover Code.
In a further blow to Intu’s shareholders, the company behind sites such as Manchester’s Trafford Centre also said it would “substantially” cut its dividend this year to conserve cash to invest in the business.
Intu shares plunged 35.5 percent to trade at a record low 124.2 pence, nearly half the 210.4 pence level of the consortium’s proposed bid.
The suitors’ u-turn comes after rival shopping centres group Hammerson scrapped a 3.4 billion-pound deal to buy Intu in April amid investor concerns a takeover would increase Hammerson’s exposure to Britain’s troubled retail sector.
Landlords have been under pressure this year from the rise of online retailing and waning consumer sentiment caused by Britain’s impending exit from the European Union, which have hit shopping at bricks-and-mortar stores.
Brexit-related uncertainty has surged in recent weeks, just as Whittaker’s consortium was considering a takeover.
This heightened uncertainty was to blame for the collapse of the bid, David Fischel, Intu’s chief executive, told Reuters.
“The escalation in the news around Brexit and all the potential ramifications has obviously ramped up a lot in the last couple of weeks and has made it a very hard climate to make a big investment decision,” said Fischel, who is due to leave Intu once a successor has been appointed.
Prime Minister Theresa May is facing a growing political backlash after she struck an exit deal with Brussels this month that has attracted ferocious criticism from many U.K. lawmakers, stoking fears Britain could crash out of the E.U. without a deal.
Peel Group and Olayan together hold 29.9 percent of Intu, with the bulk of that stake owned by the Whittaker family. The approach by the consortium was announced on October 4.
Billionaire Whittaker became Intu’s biggest investor in 2011 when he sold the Trafford Centre to Capital Shopping Centres, which was subsequently renamed Intu.
He said on Thursday that “we remain fully committed to Intu Properties as a long-term, strategic shareholder.”
By Ben Martin and Arathy S Nair
(Editing by Sai Sachin Ravikumar and Emelia Sithole-Matarise)
(This story has been edited by Kirk Falconer, editor of PE HUB Canada)