Intu shares tumble as Whittaker team pulls bid

Shares in shopping centre operator Intu fell by 35% in today’s early trading, following the announcement that a Peel-led consortium has withdrawn its offer for the group, citing “uncertainty around macroeconomic conditions and potential near-term volatility across markets”.

The consortium launched its bid in early October, and was made up of Peel, its long-term Saudi partner Olayan and Canadian investor Brookfield. Peel became a 20% stakeholder in Intu following the £1.65bn sale of the Trafford Centre in 2010, a stake that has since been added to. Peel and Olayan control 29.9% of Intu shares, while Brookfield has no current holding.

Peel chairman John Whittaker said: “We remain fully committed to intu Properties as a long-term, strategic shareholder, as demonstrated by our participation in the consortium’s possible offer. Intu’s portfolio of super regional and prime city centre shopping centres is trading strongly and benefitting from the retailer store rationalisation process that is currently underway in the UK.

“There is also significant potential to add to the portfolio through development of under-utilised land for alternative uses, creating critical mass in order to provide unparalleled, winning shopping and leisure destinations and experiences. The Peel Group looks forward to continuing to work closely with the board and the company’s other supportive, long-term shareholders to deliver on the company’s planned investment programme.”

Negotiations saw an indicative offer of 204.4 pence per share increased to 210.4 pence per share, valuing the group at around £2.8bn. The intu board agreed to grant the consortium access to “certain due diligence materials” on 19 October. Progress was made, with three extensions to the original offer deadline of 1 November, the last of which was to fall tomorrow.

The consortium had last week confirmed to intu that its legal, tax, accounting and commercial due diligence was largely complete and that nothing had arisen to lead it it deviate from the offer of 210.4 pence per share, which comes exclusive of the 4.6 pence interim dividend paid since the process started.

In October, into declared its intention to sweat its out of town holdings, exploring residential and hotel options across a total of 470 acres, as it seeks to battle the woes of a retail sector in which anchor department stores have started to fall.

The sale of troubled House of Fraser will affect rental income at Intu, which did not reach agreement with the new Mike Ashley regime on the four stores within its centres, all of which are to close in early 2019.

The value of Intu’s portfolio has dipped below £10bn, it said in October, dropping by £298m after a revaluation. Intu’s portfolio comprises 17 retail centres in the UK and three in Spain, with other trophy assets including Lakeside and Gateshead’s Metrocentre. The business, which also co-operates Manchester Arndale with M&G, has eight of the top 20 performing shopping centres in the UK, accounting for 76% of intu’s portfolio by value.

The Whittaker consortium was the second group to look at into this year, after a £3bn deal with Hammerson fell through in April.