Olayan-Brookfield Group Abandons Pursuit of Mall Owner Intu

(Bloomberg) -- A Brookfield Property Group venture abandoned its pursuit of Intu Properties Plc, citing market uncertainty.

A consortium that includes some of Intu’s biggest shareholders, Peel Group and Olyan Group, said it was concerned about “uncertainty around current macroeconomic conditions and the potential near-term volatility across markets.”

Key Insights

  • The lack of an offer from a group that includes Intu’s biggest shareholders is likely to disappoint investors after the discussions lifted the share price by more than 25 percent
  • The collapse of the deal will put serious downward pressure on the value of retail properties
  • Deal would have been the biggest ever takeover of a U.K. real estate company
  • Investors fear that Intu, which has more debt than its peers, will struggle to maintain its dividend while investing in its 9.6 billion pound ($12.3 billion) portfolio to replace failing retailers and add amenities that will persuade shoppers to visit malls rather than shop online.

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  • Intu has been forced to write down the value of its property portfolio by 3 percent since Olayan-Brookfield’s first approach
  • Peel and Olayan, and their respective concert parties remain interested in about 29.9 percent of Intu share capital; Brookfield has no interests in any shares in Intu
  • Deadline for making a bid was extended several times, raising expectations that a deal was in the works
  • NOTE: Olayan-Brookfield Group Doesn’t Intend to Make Offer for Intu

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