Intu Properties suffers second takeover failure in 2018

A group of investors walk away from acquiring the property company.

Intu Properties said a group of investors does not intend to proceed with a formal £2.85 billion (R50 billion) offer for to acquire the London and Johannesburg-listed shopping mall owner amid ongoing “uncertainty around current macroeconomic conditions and the potential near-term volatility across markets.”

The group of investors comprising Peel Group and Olayan Group, which together hold a 30 percent stake in Intu Properties, and Brookfield Property Group, increased their cash takeover proposal from 200.4 pence per share to 215 pence per share.

A successful takeover would see Intu Properties be taken private.

The latest announcement is the second takeover collapse of Intu Properties in 2018.

Earlier this year, Intu Properties’ larger rival Hammerson made and dropped its offer of £2.54 per Intu share.  Intu Properties has been under pressure from the move by consumers to shop online, which has resulted in a downturn of bricks-and-mortar shopping. The mounting pressure on Intu saw its CEO David Fischel resign in July as the company faced financial losses and warned of lower growth in the rental income of its shopping centres.  

Last Thursday, Intu Properties reported that the due diligence of the group of investors was “largely complete” after it made progress in securing finance for the deal. The company also said that “nothing has arisen” which would lead to the group of investors to adjust the proposed takeover price.

Intu Properties had also extended the deadline for the group of investors to make a firm offer until the end of November 2018. This would allow discussions to continue and the group of investors to secure the funds for the deal.

However, on Thursday, the group of investors said it didn’t intend to make an offer for Intu Properties.

“The consortium is highly appreciative of the co-operation shown by Intu’s board of directors and management team over the past six weeks. However, given the uncertainty around current macroeconomic conditions and the potential near-term volatility across markets, the consortium is not able to proceed with an offer within a time frame which is manageable within the confines of the code timetable,” the statement said.

Following the withdrawal of the possible offer, Intu Properties said it intends to re-engage with major shareholders, including Peel Group. It is also completing the process to appoint a successor to the current CEO.