IBJNews

Simon bids $4.6B for U.K.'s Capital Shopping

Back to TopCommentsE-mailPrintBookmark and Share

Indianapolis-based Simon Property Group Inc., the largest U.S. mall owner, made an offer for Capital Shopping Centres Group Plc that values the U.K. company at 2.9 billion pounds ($4.6 billion).

Simon would pay 425 pence a share in cash for London-based Capital Shopping, the U.K.’s biggest retail landlord, according to a Wednesday statement. That’s 26 percent more than Capital Shopping’s closing share price on Nov. 24, the day before Simon’s interest was disclosed. Capital Shopping has so far refused to cooperate with Simon.

Capital Shopping owns four of the U.K.’s 10 biggest malls, including the Manchester Arndale. Simon said its bid is conditional on Capital Shopping not completing the acquisition of Trafford Centre. The British company agreed last month to pay 1.6 billion pounds in shares and assumed debt for the Manchester mall in what would be the U.K.’s biggest property transaction.

“This is still a ‘phony war’ and inadequate,” Mike Prew, a London-based analyst at Nomura International, said in a note to investors. “It is not a knockout blow.”

Simon’s proposed offer is 13 percent higher than Capital Shopping’s net asset value of 377 pence a share as of Nov. 1. Land Securities Group Plc, the U.K.’s largest real estate investment trust, closed Wednesday at 9.4 percent below its net asset value as of Sept. 30 and British Land Co., the second- largest REIT was 2.6 percent lower.

Capital Shopping gained as much as 3.9 percent to 411.9 pence in London trading. The shares were priced at 406.9 pence at 10:23 a.m., bringing this year’s gain to 2.3 percent. Simon owns 5.1 percent of the stock, it said on Dec 8.

Capital Shopping disclosed Simon’s interest last month while announcing the agreement to buy the Trafford Centre from closely held Peel Group. To help with financing, Capital Shopping raised 221.2 million pounds from selling the equivalent of 9.9 percent of its outstanding equity to investors. The deal would give Peel as much as 25 percent of Capital Shopping. Shareholders are scheduled to vote on the proposal on Dec. 20.

In the same statement, Capital Shopping said it rejected Simon’s request to delay the purchase and share sale to give the U.S. landlord time to prepare an offer. Capital Shopping refused last week to provide Simon with information it said it needed to evaluate a possible takeover bid.

“Our proposed offer is highly favorable and attractive to CSC shareholders,” Simon said. “We are enthusiastic about this opportunity and committed to dedicating substantial time and financial resources with a view to concluding a transaction as soon as possible.”

Simon cut its European holdings this year with the sale of its interest in a joint venture that owned seven shopping centers in France and Poland. It recorded a gain on the sale of $281 million, according to a regulatory filing.

Simon gets 3.5 percent of its net operating income from international operations, according to a third-quarter supplemental report. The company also owns outlet shopping centers in Japan, Mexico and South Korea.

Earlier this year, Simon bid unsuccessfully for U.S. rival General Growth Properties Inc., which emerged on Nov. 9 from the largest-ever U.S. real estate bankruptcy.

Simon’s announcement Wednesday doesn’t constitute a firm offer for Capital Shopping and there can be no certainty that any bid will ultimately be made, the company said. Any offer is also conditional on due diligence and Simon arranging debt finance.

Simon appointed Citigroup Inc., Lazard Ltd. and Evercore Partners Inc. as financial advisers and Freshfields and Wachtell Lipton as its legal advisers.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. By Mr. Lee's own admission, he basically ran pro-bono ads on the billboard. Paying advertisers didn't want ads on a controversial, ugly billboard that turned off customers. At least one of Mr. Lee's free advertisers dropped out early because they found that Mr. Lee's advertising was having negative impact. So Mr. Lee is disingenous to say the city now owes him for lost revenue. Mr. Lee quickly realized his monstrosity had a dim future and is trying to get the city to bail him out. And that's why the billboard came down so quickly.

  2. Merchants Square is back. The small strip center to the south of 116th is 100% leased, McAlister’s is doing well in the outlot building. The former O’Charleys is leased but is going through permitting with the State and the town of Carmel. Mac Grill is closing all of their Indy locations (not just Merchants) and this will allow for a new restaurant concept to backfill both of their locations. As for the north side of 116th a new dinner movie theater and brewery is under construction to fill most of the vacancy left by Hobby Lobby and Old Navy.

  3. Yes it does have an ethics commission which enforce the law which prohibits 12 specific items. google it

  4. Thanks for reading and replying. If you want to see the differentiation for research, speaking and consulting, check out the spreadsheet I linked to at the bottom of the post; it is broken out exactly that way. I can only include so much detail in a blog post before it becomes something other than a blog post.

  5. 1. There is no allegation of corruption, Marty, to imply otherwise if false. 2. Is the "State Rule" a law? I suspect not. 3. Is Mr. Woodruff obligated via an employment agreement (contractual obligation) to not work with the engineering firm? 4. In many states a right to earn a living will trump non-competes and other contractual obligations, does Mr. Woodruff's personal right to earn a living trump any contractual obligations that might or might not be out there. 5. Lawyers in state government routinely go work for law firms they were formally working with in their regulatory actions. You can see a steady stream to firms like B&D from state government. It would be interesting for IBJ to do a review of current lawyers and find out how their past decisions affected the law firms clients. Since there is a buffer between regulated company and the regulator working for a law firm technically is not in violation of ethics but you have to wonder if decisions were made in favor of certain firms and quid pro quo jobs resulted. Start with the DOI in this review. Very interesting.

ADVERTISEMENT