Yahoo Finance Hammerson and Intu face multi-million pound bills for failed tie-up
Hammerson and Intu are both facing bills of upwards of £10m after a deal to combine the two companies in a £3.4bn tie-up collapsed on Wednesday.
The two companies are understood to have spent a substantial amount on fees for advisors, lawyers and bankers, although the true cost of the deal is only likely to be known in the coming months.
Hammerson announced that it would no longer be pursuing its planned takeover of rival Intu citing torrid trading on Britain’s high street that has seen a wave of company voluntary agreement (CVAs) insolvency deals by retailers looking to cut their rent bills. It has also faced stiff opposition to the deal from some shareholders.
The company is understood to have made a decision late on Tuesday night about the future of the deal, ending almost five months of talks.
The tie-up would have brought together many of Britain’s largest shopping centres including Manchester’s Trafford Centre, Lakeside in Essex and London’s Brent Cross.
But David Tyler, Hammerson's chairman, said: "We always knew that there were risks in getting to that long-term goal and having evaluated things over the last 48 hours we decided that those risks have risen now to such a level that they outweigh the benefits.
"Ultimately we have to listen to the shareholders as well."
Intu, whose properties include Manchester’s Arndale centre, attacked Hammerson’s rationale for pulling out of the deal as "unsatisfactory" after it reaffirmed its support for the takeover as recently as March 19.
Under takeover rules, Intu could now force Hammerson to go ahead with a shareholder vote on the deal but is understood to have no appetite to continue pushing for a tie-up. Its board will meet in the coming days and is very likely to decide to grant Hammerson permission to cancel the vote, a source close to the situation said.
A number of Hammerson investors had expressed their opposition to deal, warning it could “dilute” the company's portfolio of sites. Last week Dutch investment firm APG, which owns 7pc of the property firm’s shares, said it would vote against the takeover.
Analysts suggested that Hammerson would now be in a better position to spend money on markets where it is growing quickly, such as its outlets including Bicester Village.
Hammerson’s shares rose 4.46pc on Wednesday to 515.6p, while Intu’s stock dropped 3.26pc to 201.6p.
Hammerson had faced a separate takeover approach from French rival Klépierre but the suitor abandoned the plan last week, saying the UK firm’s board failed to “provide any meaningful engagement” with the proposed £5bn deal.
Under UK takeover rules it is now barred from making another approach for six months.
