The boss of shopping centre owner Hammerson was dealt a humiliating blow yesterday as his dream of creating a £21billion retail empire was shattered.
The company, whose estate includes the Bullring in Birmingham and Bicester Village in Oxfordshire, abandoned plans to merge with rival Intu following a backlash from investors.
In a dramatic U-turn, Hammerson said that the proposed £3.4billion takeover of Intu was now ‘no longer in the best interests of shareholders’ – after its leaders had spent weeks trying to persuade them otherwise.
Merger off: Hammerson chief David Atkins has been forced to abandon plans to merge with rival Intu following a backlash from investors
The revolt by his own investors was branded ‘humiliating’ for Hammerson chief David Atkins following his earlier enthusiasm for a deal that would have created an empire of around 80 shopping centres and retail parks worth £21billion.
David Tyler, Hammerson’s chairman, said: ‘Ultimately we have to listen to the shareholders.’
And the failure triggered an angry response from Intu chief executive David Fischel, who said the excuses offered by Hammerson were ‘unsatisfactory’ and added: ‘I’m cross about the wasted time and energy.’
Atkins, 52, hatched the take-over plan over drinks with long-time friend Intu chairman John Strachan, 66, last summer before announcing his intentions to great fanfare in December.
‘We quickly came to the conclusion that we would be better together to take the business forward,’ Atkins said at the time, adding that the deal marked ‘an exciting milestone in the history of Hammerson’.
The enlarged company would have brought together key Hammerson assets with Intu’s centres including the Metro Centre in Gateshead, Lakeside in Thurrock, and the Trafford Centre in Greater Manchester.
But right from the beginning investors were far from convinced and Hammerson shares plunged more than 6 per cent on the day the deal was announced.
The stock continued to fall, sinking as low as 435p last month, before French rival Klepierre launched an audacious £5billion bid for Hammerson that valued the company at 635p a share.
The approach from the French was rebuffed by Hammerson chairman David Tyler, piling further pressure on the company to convince shareholders of the merits of its tie-up with Intu.
With investor unrest mounting, APG, one of Hammerson’s biggest shareholders, last week said it would vote against the deal with Intu. Hammerson finally abandoned its plans yesterday, telling the rest of its shareholders to vote down the deal.
It noted that a number of high street chains had collapsed since the deal was announced, as well as a decline in confidence in the retail industry among investors.
‘It is also apparent from extensive engagement with shareholders that there is a wide range of views on the merits of the Intu acquisition,’ it added.
Hammerson shares rose 4.2 per cent, or 20.6p, to 514.2p as it outlined plans to boost value by selling assets, returning cash to investors and concentrating on high-end outlets.
But Laith Khalaf, a senior analyst at Hargreaves Lansdown, said: ‘This is an embarrassing and humiliating U-turn for Hammerson.
The demise of the take-over has prompted a jump in the Hammerson share price, which is a pretty quantifiable judgement on the merits of the deal.’
Russ Mould, of broker AJ Bell, said: ‘The move to abandon the Intu deal is undeniably a big reverse for Atkins, given how actively he championed it.
‘However, you can at least say that he appears to have listened to his shareholders.’