Capital Shopping Centres, the owner of the MetroCentre in Gateshead and Lakeside in Thurrock, is the biggest faller in the FTSE 100 on fears potential bidder Simon Property could walk away.
Capital is planning to buy Manchester's Trafford Centre in a complicated £1.6bn deal, which included a £221m fundraising. But Australia's Simon - a 5.6% shareholder in Capital - called for the deal to be scrapped and said it was considering a cash offer. Analysts said Simon would have to pay around £3bn, or 450p a share, to win the day.
But in a letter to Capital issued today, Simon said it wanted to conduct due diligence on the company, and if the board refused that request, it would terminate its proposal. It also repeated its opposition to the Trafford deal and said it would vote against the plan at a meeting on 20 December, as well as urging other shareholders to follow suit. It said Capital was substantially overpaying for the centre, and the deal would diminish shareholder value. And it also threatened to sell its stake if it didn't get its way:
If the proposed Trafford Centre acquisition is approved, we would need to consider liquidating our position in Capital Shopping Centres.
The statements have unnerved investors and Capital's shares have fallen 15.5p to 392.5p, down nearly 4%. Sue Munden at Seymour Pierce said:
[Capital's] shares are now trading at a premium of 8.8% to the recently announced net asset value of 375p. This premium we believe is only sustainable in a bid situation and this morning's announcement would appear to reduce the likelihood of an offer. Simon Properties has said that it requires more information to permit them to propose an alternative for shareholders and Capital has not yet responded to say whether this will be provided. We maintain our sell recommendation at current levels: although the equity raise will be beneficial for Capital given the expected challenging reversion situation in the shopping centres which will continue to make it difficult to raise income substantially in the short term, we believe that Capital should trade below net asset value.
