Picture: SIPHIWE SIBEKO/REUTERS
Picture: SIPHIWE SIBEKO/REUTERS

Shopping mall owner Hammerson plc says it will not be derailed by an opportunistic share and cash takeover proposal by France’s Klépierre, claiming it undervalues the JSE-listed retail real-estate investment trust’s assets.

The French mall operator approached Hammerson with a £4.9bn (R82.87bn) bid proposal as it seeks to stop the UK company taking over Intu Properties, and creating a large competitor in European retail.

This sent Hammerson’s share price up nearly 31% to R95 in morning trade on Monday. It closed 26.46% higher at R92.

Hammerson and Intu announced in December that their boards had agreed to a merger and their shareholders were being canvassed. If successful they would create the largest mall owner in Britain, which will have exposure to British and European malls. Klépierre, which has a market capitalisation of €10.51bn (R156bn), would face a fierce competitor in an enlarged Hammerson worth about R105bn.

Hammerson turned down what it called a “highly preliminary and nonbinding proposal”.

The proposal, received on March 8, valued Hammerson at 615p per share, apportioned 50% in new Klépierre shares and 50% in cash. “The proposal from Klépierre is wholly inadequate and entirely opportunistic. It is a calculated attempt to exploit the disconnect between our recent share price performance and  the inherent value of our unique … portfolio, which is delivering record results,” said Hammerson chairman David Tyler.

Stanlib’s head of listed property funds, Keillen Ndlovu, said Klépierre’s bid suggested malls were still highly valuable.

“The key message without debating whether the deal makes sense or not is that the deal suggests that mall real estate investment trusts are not appropriately valued or are cheaply valued and that there’s still a case for investing in good-quality malls despite concerns around e-commerce or online shopping,” he said.

However, the proposed merger has had its critics, as it may not benefit both parties.

“Overall we think the merger is good for Intu shareholders. However, we are not convinced of the merits for Hammerson shareholders. The merger will create scale in a sector that continues to face fundamental headwinds, which is putting pressure on both rental values and cap rates,” said Peter Clark, a portfolio manager at Investec Asset Management.

“We don’t think scale solves any of these issues and from Hammerson’s perspective it increases the exposure to the UK, which is a challenging market, and increases the leverage.”

andersona@businesslive.co.za

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