Hammerson acquires Trafford Centre owner to form retail giant

The boards of retail big-hitters Hammerson and Intu Properties have reached an agreement on the terms of an offer by Hammerson to acquire Intu, owner of the Trafford Centre, for £3.4bn.

The deal will create a £21bn portfolio of retail and leisure destinations across Europe and open up new opportunities for growth in lucrative Spanish and Irish markets, the group said. The acquisition will also see £2bn of mainly UK assets pruned as Hammerson trims its newly extended portfolio.

As well as the Trafford Centre, Intu also operates the Metrocentre in Gateshead, Lakeside in Essex and co-owns Manchester Arndale. Key properties in the Hammerson portfolio include Birmingham’s Bullring, the Victoria Quarter in Leeds and Bristol’s Cabot Circus. Industry analyst GlobalData say that the acquisition will give the group a stake in 12 of the UK’s 20 ‘supermalls’.

The expanded group will be known as Hammerson and will be led by David Atkins as chief executive and Timon Drakesmith as chief financial officer.

Hammerson chairman David Tyler will chair the new group, with Peel chief John Whittaker as deputy chairman. Peel had been Intu’s largest single shareholder with a 27% stake and the new group overall will see six directors nominated by Hammerson and four by Intu.

Commenting on the acquisition, David Tyler said: “This transaction will deliver real value for shareholders. The financial strength of the enlarged group and its strong leadership team will make it well-placed to take advantage of higher growth opportunities on a pan-European scale.”

David Atkins said: “This marks an exciting milestone in the history of Hammerson. The acquisition creates a leading pan-European platform of desirable retail and leisure destinations which are better positioned to serve the needs of our retailers, excite our customers and support our partners and communities. I hold Intu’s high-quality centres in high regard and I look forward to working with a strengthened team to enhance the performance of our entire portfolio.”

The deal values Intu shares at 253.9p each, a rise of 27.6% on yesterday’s closing price. Hammerson shareholders will own 55% of the shares of the enlarged group and shareholders will get one Hammerson share for every two Intu shares held. Hammerson shares are currently valued at 523p each.

Following the deal, Peel will hold around 15% of the enlarged group. 

Sofie Willmott, senior retail analyst at GlobalData, said that she expected the group to dispose of its smaller sites, while concentrating its efforts on developing supermalls and enhancing them to appeal to shoppers seeking product and retailer locations alongside an expanded food service and leisure offer.