French shopping center operator Klepierre has abandoned a 5 billion pound bid for Hammerson, accusing the British property company of failing to provide “meaningful engagement” over a potential deal.
Shares in the London-listed company were down 11 percent at 461 pence at 0915 GMT, erasing most of their gains since Klepierre made its original approach in March. Shares in Paris-based Klepierre were up 1.5 percent.
Klepierre’s decision to drop its takeover attempt leaves the company behind Birmingham’s Bullring center free to pursue its own acquisition of fellow London-listed shopping center operator Intu Properties.
Announced last December, Hammerson’s deal with Intu had been met by scepticism from Hammerson investors as it increased the company’s already high exposure to a squeezed UK retail sector.
Klepierre’s decision to scrap its unsolicited bid comes after its Chairman Jean-Marc Jestin met Hammerson counterpart David Tyler on Monday evening to make an improved takeover proposal of 635 pence a share, split equally in cash and stock.
Hammerson had rejected the sweetened proposal on Wednesday, saying it was only a marginal increase on Klepierre’s initial bid of 615p and still undervalued the company.
That represented a premium of 45 percent to Hammerson’s share price on March 16, the day before the French company disclosed its initial approach, Klepierre said.
CONSOLIDATION
Under British rules, Klepierre had until April 16 to make a firm offer or walk away from Hammerson, which also owns Bristol’s Cabot Circus and a stake in the Bicester Village retail outlet.
“The board of Hammerson did not provide any meaningful engagement with respect to the increased proposal and, after careful consideration, Klepierre has concluded that it does not intend to make an offer for Hammerson,” the French company said.
Hammerson declined to offer any immediate comment on Klepierre’s decision to drop the deal.
For Klepierre, a successful acquisition of Hammerson would have given it shopping centers in the UK and Ireland, countries where the French firm currently does not have a presence.
It would have come as part of a wave of consolidation in the malls sector, as retailers grapple with competition from online competitors such as Amazon.
Hammerson, however, rebuffed the approach, saying Klepierre’s bid was below its net asset value per share (NAVPS) of 776 pence as of the end of December and that it remained committed to the Intu deal.
On April 5, it bolstered its defense against the bid by hiking its NAVPS to 790 pence as of the end of March.
British retailers have been suffering as inflation-hit British consumers cut back on spending, making many investors wary of the sector.
Toys R Us UK and electronics retailer Maplin entered administration at the end of February, while shares in early-years retailer Mothercare have recently slumped to an all-time low.
“However, if the Intu deal does not complete, it would be a rejection of management’s vision.”
