Intu bidders abandon £2.8bn deal amid economic uncertainty

A £2.8 billion deal to buy shopping centre giant Intu Properties has been scrapped after the consortium of takeover suitors blamed economic uncertainty and market volatility.

Intu, which owns the Trafford and Arndale centres in Manchester and Lakeside in Essex, said market conditions meant the consortium – led by John Whittaker’s Peel Group – could not continue with its proposed offer within the timeframe set out by City takeover rules.

It said the decision was due to “the uncertainty around current macroeconomic conditions and the potential near-term volatility across markets”.

It comes despite a number of extensions to the takeover timetable, since the Peel Group, Olayan and Brookfield Property tabled a £2.8 billion offer for Intu in October.

It is the second failed takeover attempt for Intu after Hammerson abandoned a £3.4 billion approach in April.

Mr Whittaker, chairman of the Peel Group, 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 said it plans to continue investing long term in its shopping centres, but will lower investor dividend payouts in the short term given the reduced pool of potential buyers and “challenging” asset-disposal potential.

It added the board will re-engage with major shareholders, including Peel, and complete the search for a successor to its chief executive.

Intu said: “Whilst market sentiment towards retail and retail property remains negative, Intu is confident of its commercial prospects which are underpinned by market leadership in UK regional shopping centres, clear focus on the highest quality assets and resilient operational performance in a challenging market.”

It warned that recent high-profile retail collapses, such as House of Fraser, have hit its full-year rental income by about 1.5%, leaving expected like-for-like growth at between 0% and 1%.

It forecasts like-for-like rental income growth to remain between 0% and 1% in 2019.

Intu has already recently warned the value of its shopping centres has fallen amid difficult retail conditions.

The group said in October its net asset value fell 3% in the third quarter, reflecting “negative investor sentiment towards UK retail property”.

Intu’s portfolio was valued at £9.58 billion on September 30.

It is behind 18 shopping centres across the UK, also including the Metrocentre in Gateshead.