Discussions between shopping centre landlord Intu (INTU) and a consortium led by near-30% shareholder Peel, chaired by Intu’s deputy chairman John Whittaker, have revealed potential all-cash bids for the former business, initially at 205p and later at the higher level of 215p.
These are not yet official bids and a deadline of 5pm on 1 November for the consortium to put up or shut up remains in place.
The price does not look too generous, particularly given dividends paid before the prospective deal completes would be deducted. When news of the interest first emerged in early October 2018 investment bank Liberum suggested an offer of 238.7p might be acceptable.
AJ Bell investment director Russ Mould comments: ‘Fellow mall investor Hammerson (HMSO) was apparently prepared to pay the equivalent of 253.9p in an all-share offer before jilting Intu earlier this year and the company’s current net asset value is 362p.
‘Yet an imminent revaluation of Intu’s assets might cast the price in a better light as many analysts believe retail sector property valuations will have to be marked down.’
This is not that encouraging for Hammerson, perhaps explaining why the shares have given up early gains today to trade just 0.5% higher at 446.9p.
It lends credence to the view by Jefferies’ head of real estate Mike Prew that ‘REITS are “just bugs looking for a car windscreen” and will probably find it with the portfolio valuations in the November earnings season’.
Hammerson and Intu typically update the market in early November, but Intu’s update looks like being brought forward ahead of the deadline on the prospective takeover deal.
