British shopping centre owner Hammerson has backtracked in its original plans to acquire smaller rival Intu in a £3.4 billion deal.
Hammerson proposed an all-share merger with Intu back in December, but the board has now withdrawn its recommendation to shareholders to vote in favour of the deal.
This follows increasing opposition to the deal, with Hammerson’s second-largest shareholder APG Asset Management, which owns a 7.1 per cent stake revealed in a letter to Hammerson that the share offer was “insufficiently attractive”.
Both shopping centres’ share prices have suffered since the deal was announced, with investors scared the addition of Intu’s estate would dilute the quality of Hammerson.
In today’s morning trading Hammerson’s stocks jumped by around 3.5 per cent, while Intu’s fell by 6.9 per cent.
Earlier this month the proposed tie-up was put on hold as French property firm Kleppiere issued its own £5 billion bid for Hammerson, which it pulled out of last week following two failed bids.
“It is clear that the heightened risks to the Intu acquisition now outweigh the longer-term benefits,” said Hammerson chief executive David Atkins.
“We have a clear strategy that has delivered consistent, strong returns on a standalone basis and we look forward to updating the market in the near term on our plans to accelerate the delivery of further value for shareholders,” he added.
“The equity market’s perception of the broader UK retail property market has deteriorated since the start of the year,” Hammerson said in a statement to the London Stock Exchange on Wednesday morning.
“This has led to a disconnect between the Company’s share price and the fundamental value of its business and prospects.
“This perception has been intensified by market concerns over the extended period of time that it would take to complete the transaction and realise longer-term returns from the Intu Acquisition.”
If the deal had gone ahead, Hammerson would have become the biggest UK property company in the UK, with its portfolio including Birmingham’s Bullring centre and Intu’s Lakeside in Thurrock and Trafford Centre in Manchester.