Picture: ISTOCK
Picture: ISTOCK

Intu investors may be 15% richer after Wednesday’s announcement of Hammerson’s offer to buy Intu Properties, but those who have stuck with Intu since it was unbundled from Donald Gordon’s Liberty International — under its first incarnation as Capital Shopping Centres — have seen a rand return of just 5.6% since 2010 against 21.1% annualised growth from Capital & Counties (Capco), the second arm of the Liberty International empire and 19.1% from the UK Real Estate Investment Trust (Reit) benchmark.

Insiders say that Gordon, whose family trust owns 7.69% of Intu and 7.26% of Capco, was not likely to make any changes to Intu’s management under CEO David Fischel, but talk is that there was behind-the-scenes pressure from investors to initiate changes.

Investec Asset Management portfolio manager Peter Clark says: "Intu was in a tough position: the share price had gone down, NAV [net asset value] was heading down, the balance sheet was highly leveraged and there needed to be some out and one clear out was corporate action."

Enter the likely kingmaker in this deal: John Whittaker, a publicity-shy property mogul who holds, in his own capacity, 26.5% of Intu as well as a 3.58% stake in Hammerson. He is chairman of investment company the Peel Group and was named 31st on the UK Sunday Times Rich List in 2013, with an estimated fortune then of £2.3bn.

Whittaker was appointed deputy chairman of Intu in January 2011 and will become, under the deal with Hammerson, deputy chairman of the enlarged group. John Strachan, who was named chairman of Intu in May, will become senior independent director of the enlarged group while Fischel appears to have been let go.

Clark says the share-for-share offer, which equates to around 250p per Intu share "is perhaps not where some shareholders think the true NAV is". But, he says, shareholders are "transferring on a share-for-share basis into another company, which is also trading at a discount to NAV and with a management team that’s perhaps better positioned to extract value from the assets and deleverage the balance sheet to create more flexibility within the company".

As for Hammerson, Clark says "it almost doubles the size of the Hammerson portfolio, so it is a significant transaction for them. But it’s going to take a lot of time and a lot of work to really get the value creation coming through".

Stanlib listed property funds head Keillen Ndlovu says the takeover, should it go ahead, will be largely positive for Intu’s shareholders.

"There has been speculation for quite some time that Intu could be a takeover target or that something could happen, more so due to the muted growth outlook leading to the share price’s under-performance and the share price trading at a discount to NAV of 50%.

"We have preferred Hammerson over Intu because of Hammerson’s superior earnings growth outlook, lower debt levels, better diversified portfolio and more proactive asset management," says Ndlovu.With Alistair Anderson


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