The board of UK retail REIT Hammerson has withdrawn its recommendation to Hammerson shareholders to vote in favour of the £3.4 bn (€3.9 bn) acquisition of peer Intu.
In a statement this morning, David Tyler, chairman of Hammerson, said: 'After careful consideration, the board has concluded it is no longer in the best interests of shareholders to carry out the Intu acquisition', citing board and investor preferences to focus on 'Hammerson’s prospects as a standalone business as we pursue our plans for future growth'.
Intu responded with a statement calling the 'explanations given' by the Hammerson board as 'unsatisfactory'. Intu said it had been pursuing the deal 'in good faith' since Hammerson's launched the takeover bid for its smaller peer on 6 December 2017.
Earlier this week, Dutch pension fund APG Asset Manangement warned that it would vote against Hammerson's planned acquisition of Intu at its upcoming shareholder meeting.
In a public letter, APG said it had 'substantial concerns' about Hammerson's all-share offer for Intu, saying it was 'insufficiently attractive' for Hammerson shareholders and that it would 'siginficantly dilute Hammerson's high-quality portfolio'.
APG holds a 7% stake in Hammerson, making it the company's second-largest shareholder, according to Thomson Reuters Eikon data.
APG sent the letter to Hammerson's chairman David Tyler and CEO David Atkins last Friday in response to French REIT Klépierre's announcement earlier that day that it had abandoned its takeover bid for Hammerson. The French company said that there had been a lack of 'any meaningful engagement' from Hammerson's board after it raised its proposal for Hammerson to 635 pence a share earlier this week. APG has a 12% stake in Klépierre, making it the firm's second biggest shareholder after Simon Property Group.
Hammerson's board said it had 'reassessed the proposed acqusition of Intu in light of updated information on current market dynamics in the UK'.
'The equity market’s perception of the broader UK retail property market has deteriorated since the start of the year', despite the 'resiliance' of its own portfolio, it noted. 'This has led to a disconnect between the company's share price and the fundamental value of its business and prospects'.
'As a result, the board of Hammerson has concluded that the heightened risks associated with the Intu acquisition outweigh the long-term rewards that can be expected in comparison to other strategic options open to the company,' it continued.
Intu, which released an upbeat trading update yesterday without mentioning the takeover, said that it was 'entirely confident of Intu's commercial future and prospects'.
'The board of Intu will be meeting to consider Hammerson’s request not to convene a shareholders’ meeting to vote on the Intu transaction,' it concluded.