US mall king David Simon has expanded his reach in Europe with the planned merger of Klépierre and rival Corio.
Klépierre’s €4.2bn (£3.3bn) all-share offer for the Netherlands’ Corio will give Simon a stake in the second-largest retail specialist in Europe.
Simon Property Group owns 29.4% of Klépierre, which it bought from French bank BNP Paribas in March 2012 after a failed £3bn takeover of the UK’s Capital Shopping Centres.
The two parties have reached a conditional agreement and key shareholders SPG and BNP Paribas , which still owns 21.7%, and APG, which owns 30.6% of Corio, support the deal.
Assuming 100% of Corio shares are tendered, the three key shareholders will respectively hold 18.5%, 13.7% and 13.6% of Klépierre after the deal.
BNP Paribas shares have no lock-up, prompting speculation that they may hit the market post-transaction, allowing SPG to increase its stake again.
The merger will expand Klépierre’s holdings across Europe – most notably in Germany and Italy – by creating ?a €21bn powerhouse which operates 182 shopping centres in 16 European countries.
Klépierre-Corio will close the gap somewhat to Unibail-Rodamco, European’s largest shopping centre firm, which has a total portfolio of €33.6bn.
The planned deal has once again raised questions about the future of UK retail specialist Hammerson – itself often the subject of takeover speculation, potentially from Unibail.
One source said: “Two years ago Hammerson had a strategic review and decided to sell London offices to specialise in retail and focus on a European expansion, but they are still in the same place.
“They don’t want to be taken over, but maybe it’s time for management to ask themselves some hard questions.”
APG go-ahead paved way for merger
Talks which led to the €4.2bn transaction began six months ago when Klépierre approached Corio’s largest shareholder, APG. After a positive response from the Dutch pension fund, Klépierre began discussions with Corio.
The Paris-headquartered firm has offered 1.14 shares for one ordinary Coria share, and Klépierre management said that it would not be willing to pay the same €41.4m a share in cash.
The 16% premium to Corio’s share price on 28 July and an 8% premium to Corio’s half-year EPRA NAV is considered a “full price” by analysts but is justified by the “underlying idea and synergy potential”.
bridget.o’connell@estatesgazette.com
