Trafford Centre 300
THE battle over the Peel-owned Trafford Centre outside Manchester took another twist today after it emerged the site’s proposed new owner spurned another intervention by one of America’s biggest shopping mall firms.
Capital Shopping Centres, which owns Essex’s Lakeside centre, described the latest plan from Simon Property Group, which is also one of its biggest shareholders, as "completely impracticable".
Capital has been locked in a row with Simon after it offered £1.6bn – comprising a purchase price and taking on almost £800m of debt – to buy the Trafford Centre from developer Peel Holdings, giving the company controlled by billionaire John Whittaker nearly 20% of its shares and a seat on the board.
Simon objected to the deal saying Capital has offered too much money and would dilute its value by giving away so many shares.
The US firm, which earlier expressed an interest in buying Capital but was denied access to its accounts, has now suggested an alternative deal that would see Capital raise cash from its shareholders to pay Peel, which owns Mersey Docks and a 35% stake in Liverpool John Lennon airport.
Simon has offered to buy shares at a higher price than Peel to help Capital raise some of the money, a move that would see Simon own between and 18.4% and 26.9% of Capital’s shares, depending on how much other shareholders put in.
Capital said that Simon’s deal was impractical because Peel wanted to become a shareholder and remain an investor in regional shopping malls. It urged shareholders to vote in favour of the Trafford centre deal next Monday.
In an open letter to Capital chairman Patrick Burgess, Simon’s executive chairman David Simon said his company had spoken to other shareholders who shared its concerns about the bid.
He added that his earlier offer to open discussions about buying Capital remained on the table.
A Peel statement released this morning said: "Peel Group is aware of the letter from Simon Property Group Inc to Capital Shopping Centres Group plc, proposing fundamental changes to CSC’s agreed Trafford Centre transaction with Peel.
"Peel Group remains committed to the agreed transaction with CSC, subject to approval of CSC shareholders on December 20.
"Peel has no intention of selling the Trafford Centre for cash and this has never been an aim of the group – in spite of the fact that Peel has been advised a cash sale would achieve a higher price – and nor does Peel intend entering into such a discussion.
"Rather, Peel’s stated objective is to increase and diversify its exposure to the UK shopping centre market via a long-term investment in CSC."
It added: "The transaction will bring to CSC the value of John Whittaker’s extensive experience in the retail and leisure property sectors and, through the addition of the Trafford Centre, will create an unrivalled portfolio of UK regional shopping centre assets."
Liverpool stockbroker Panmure Gordon backs CSC’s proposed deal with Peel, saying: "In the long-run, if the business stays publicly quoted, the future looks improved with ownership of The Trafford Centre and a strengthened balance sheet."