Hammerson stock downgraded as pessimism over Intu deal grows


Hammerson’s proposed takeover of rival Intu has been hit by further resistance as stock prices plummet amid warnings of a shareholder mutiny.

International investment bank Credit Suisse downgraded the stock of both Hammerson and Intu, with the former dropping 4.86 per cent to 434.4p per share, the lowest level in six years.

Credit Suisse cautioned the shopping centre giant that investors could revolt in a vote next month over the proposed £3.4 billion deal, first announced last December.

Since the deal was announced, Hammerson has tumbled out of the FTSE 100, with share prices dropping a total of 19 per cent.

Shareholders and analysts have been critical of the deal, questioning its increased exposure to the struggling UK retail market, adding that the deal looked more attractive for Intu.

“Deterioration in the UK retail environment since the deal was announced in December poses a risk to the transaction being completed, which we factor into our target price and rating,” Credit Suisse said.

“We believe Intu’s portfolio would not command the yields used in its recent appraisal if the assets were to be disposed of in the open market and the five per cent average yield we use in our own assessment to value Intu’s portfolio results in values 13 per cent lower than last appraised by the company.”

Despite the Swiss bank’s pessimism around the deal, Goldman Sachs has defended the company.

“While Hammerson’s shares have continued to underperform, evidence grows of the operational performance and potential merger synergies,” it stated.

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  1. Most in retail property would acknowledge that Intu’s “book of ERVs” is the stuff of fairytales. Factor in that they are not able to react commercially to the deteriorating retail occupier market (because this impacts their valuation), and it looks like Credit Suisse have actually been kind there. Of course Intu may not be the only retail landlord guilty of this …..


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