FINANCE: European shopping centre owner Klépierre has made an offer to buy rival Corio to create a €21bn (£16.6bn) retail giant.
The France-headquartered company is offering 1.14 Klépierre shares for one Corio share, which values the Dutch firm at €41.4 per share.
This reflects a 16% premium to yesterday’s close and an 8% premium to Corio’s half-year EPRA NAV.
The two companies have reached a conditional agreement on the €4.2bn (£3.3bn) deal which gives Corio an enterprise value of €7.2bn.
Klépierre’s largest shareholders, US mall giant Simon Property Group and BNP Paribas, “fully support the contemplated transaction”, as does Corio’s largest shareholder, APG.
If the merger goes through, Simon Property Group boss David Simon, chairman of Klépierre’s supervisory board, will remain chairman of the combined group.
A statement by the companies said the deal will give shareholders the benefit of a “scale-up effect”, with €21bn of gross assets and a wider combined footprint of prime shopping destinations in key strategic regions of Europe.
It said there is a “significant organic growth upside” through an active leasing strategy on a wider platform, acceleration of the portfolio refocus process, and a development pipeline of more than €3bn.
The companies said the new group will have a best-in-class financial profile, with combined market capitalisation of more than €10bn and an LTV of about 40%.
They described the transaction as “value creating” and immediately accretive, with expected run-rate synergies of about €60m.
Analysts at JP Morgan Cazenove said that in reaching the conditional agreement, the firms had already resolved “several potential stumbling blocks”.
They highlighted the fact that APG has agreed to irrevocably tender its 30.6% shares in Corio.
JP Morgan Cazenove said the combined entity is expected to have recurring earnings of €665m with the potential to reach €60m worth of annual synergies in the next three to five years, and added that there is also potential balance sheet improvement.
It added: “This potential merger has a clear rationale in our view (Corio has been a perennial takeover target) as Corio has suffered for several years (operationally), but the first signs of improvement in the Dutch retail market have emerged (26% of Corio’s assets) and with Klépierre sharpening its portfolio (sale of Carrefour portfolio) and improving the balance sheet in recent years, we are positive from both points of view.”
bridget.o’connell@estatesgazette.com
