Hammerson Shares Plunge After Klepierre Ends Pursuit of Firm

(Bloomberg) -- Hammerson Plc dropped as much as 14 percent in London trading after Klepierre SA abandoned its pursuit of the U.K. company, a deal that would have created one of the largest retail-property owners in Europe.

Klepierre’s decision paves the way for Hammerson to proceed with its own acquisition of rival Intu Properties Plc which it put on hold last week while awaiting clarity. The French landlord had made two verbal bids for Hammerson, both of which were rejected by the U.K. mall owner. The second offer valued the company at about 5 billion pounds ($7.1 billion).

“The board of Hammerson did not provide any meaningful engagement with respect to the increased proposal and, after careful consideration, Klepierre has concluded that it does not intend to make an offer,” the Paris-based company said in a statement Friday.

Klepierre had been seeking to exploit weakness in Hammerson’s share price caused by concerns over online rivals and the company’s plan to acquire Intu. The offer, which values Intu at about 3.5 billion pounds, would create Britain’s largest publicly traded landlord. Intu shares rose as much as 2.9 percent to 216.70 pence, the highest in three weeks.

Unlocked Potential

“The pall over U.K. retail calls into question the wisdom of increasing exposure when structural change in retail is at its most destructive, Bloomberg Intelligence analyst Sue Munden wrote in a note, referring to the Intu purchase. However, the deal would give Hammerson a chance to “enhance the quality of the company’s capital-constrained malls, unlocking potential in the 21 billion pounds of combined assets.”

Hammerson’s shares had been buoyed by Klepierre’s efforts to buy the company. The stock had gained 19 percent since March 16, the last trading day before the company first said it had received an informal offer from Klepierre and turned it down.

Shopping-mall owners are combining as they try to cut costs and focus on premium properties, making them more attractive to retailers that are opening fewer stores as Internet sales rise. Brookfield Property is seeking to buy GGP Inc. in the U.S. and Unibail-Rodamco SE is trying to take over Australia’s Westfield Corp.

Hammerson’s board carefully evaluated Klepierre’s second bid, which “very significantly undervalued” the company, the U.K. landlord said in response to Klepierre’s announcement. Hammerson said it will continue to engage “intensively” with shareholders.

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