Hammerson reveals plan to ditch £3.4bn takeover of rival Intu
One of Hammerson's top shareholders has backed the company's decision to walk away from its takeover of rival Intu, saying executives "should be applauded for taking a difficult decision".
Hammerson, which owns Abbey Retail Park in Newtownabbey, said yesterday it hopes to ditch its £3.4bn takeover of Intu by urging a shareholder vote against the acquisition amid growing dismay over the health of the UK retail property market.
Intu this month announced a £50m investment in its only Northern Ireland asset - Sprucefield Retail Park outside Lisburn.
Birmingham Bullring owner Hammerson issued a shock market announcement saying it was withdrawing a recommendation for a vote in favour of the takeover, which was "no longer in the best interest of shareholders".
Top 20 shareholder JO Hambro Capital Management, which owns around 1.8% of Hammerson, praised the strategy change.
In a statement, JO Hambro said: "Whilst we were not negative on the Intu transaction, we appreciate the change in view taken by the board and the decision to focus on the higher growth parts of the portfolio such as value retail and Ireland.
"The board should be applauded for taking the difficult decision to change direction from that laid out in December when the Intu merger was announced, as it became increasingly apparent how negative sentiment had become towards UK retail assets in general."
Hammerson's share price was up by more than 4% on the news, while Intu's fell by 3%.
It comes just months after Hammerson made an all-share offer for Intu in December, but the company said stock markets had since soured on the sector.
"Despite the resilience of Hammerson's portfolio and strong operating metrics in Q1 2018, the equity market's perception of the broader UK retail property market has deteriorated since the start of the year," Hammerson said in its update.
It added: "Over the last five months, the financial strength of retailers and other tenants in the UK has softened and a number of retailers have entered into administrations or CVAs, while consumer confidence has also remained subdued."
It said that the equity market "perceives a heightened level of risk" around retail.