Shares in Intu Properties – the group behind Lakeside shopping centre and Manchester’s Trafford Centre – plunged nearly 40 per cent after it was jilted for the second time this year.
A £2.8billion proposed takeover led by property mogul John Whittaker’s Peel Group has collapsed with the new suitors blaming ‘economic uncertainty and market volatility’ for the change of heart.
Intu was shunned in April this year too when its larger rival Hammerson reneged on a £3.4billion approach.
Intu is behind 18 UK shopping centres, including Lakeside and the Manchester Trafford Centre
In a statement today, Intu said that market conditions meant the consortium of buyers could not continue with its proposed offer within the timeframe set out by City takeover rules.
It said the decision was due to ‘the uncertainty around current macroeconomic conditions and the potential near-term volatility across markets’.
It follows a number of extensions to the takeover timetable, since the Peel Group, Olayan and Brookfield Property tabled the bid for Intu in October.
John Whittaker (above) has decided not to go ahead with a takeover of Intu
Whittaker, chairman of the Peel Group, which is Intu’s biggest shareholder, said: ‘We remain fully committed to Intu Properties as a long-term strategic shareholder, as demonstrated by our participation in the consortium’s possible offer.’
Intu said it remains committed to investing in its shopping centres, but will lower dividend payouts in the short term given the reduced pool of potential buyers.
It warned that recent high-profile High Street collapses, such as House of Fraser, have hit its full-year rental income by about 1.5 per cent.
Intu Properties’ share price has fell to £1.14 in early trading. However, the group enjoyed a 30 per cent rise in October when the consortium’s takeover bid was first touted and another bump when the buyer upped its price.
Today’s news knocked shares in other property groups too. Hammerson shares fell by 7 per cent, Land Securities tumbled 3 per cent and British Land’s stock dropped by 2 per cent.
Intu is in the middle of a scrap with Sports Direct ‘s Mike Ashley, who bought House of Fraser earlier this year.
The retail tycoon is closing the three House of Fraser branches on Intu’s patch after negotiations soured, and has threatened to vacate his Sports Direct stores on Intu sites too.
Retail analyst Nick Bubb said that the row with ‘undoubtedly undermined the appetite of the consortium to pursue its bid for Intu’.
‘The company notes that the loss of House of Fraser in its centres will cost it c1 per cent of next year’s rental income, although it does not refer to the likely loss of all the Sports Direct shops as well over time,’ Bubb said.
Intu is behind 18 shopping centres across the UK, including the Metrocentre in Gateshead.