A leading Shaftesbury investor has warned that its planned £3.5bn merger with Capco could leave shareholders worse off.
Chris Hills, chief investment consul at Investec, said Shaftesbury shareholders had cause to be nervous about merging with a company trading at a 24% discount to its net asset value, given that Shaftesbury trades at only an 8.8% discount.
He added that Capco’s discount implies the value of its portfolio will not improve to the same extent as Shaftesbury’s.
“If Shaftesbury is going to recommend the deal, it will have to tell us why that perception might be wrong,” said Hills. Investec owns a 1.65% stake in Shaftesbury, valued at £36.1m.
See also: Shaftesbury-Capco merger talks: everything you need to know
The two companies confirmed last weekend that they were in advanced talks over an all-share merger that would unite Shaftesbury’s portfolio in Soho, Chinatown and Carnaby Street with Capco’s neighbouring assets in Covent Garden. Under the proposed terms, Shaftesbury shareholders would own 53% of the combined company, which would be led by Capco boss Ian Hawksworth.
The proposed deal has the indicative support of Norges Bank, which owns 25.75% of Shaftesbury and 15% of Capco, which itself already owns 25.2% of Shaftesbury’s shares.
