The biggest public real estate firm in the United States has unveiled plans to bid for the owner of the Lakeside and Metro shopping centres in a move valuing the company at £2.9 billion.
Simon Property Group said it would make an offer for Capital Shopping Centres, in which it has a 5% stake, as long as the UK firm pulls a controversial acquisition of Manchester’s Trafford Centre.
Simon, which earlier expressed an interest in buying Capital but was denied access to its accounts, has signalled a price of 425p per share with the condition that the proposed acquisition of the mall does not proceed.
Capital has been locked in a bitter battle with Simon since it offered £1.6 billion to buy the Trafford Centre from Peel Holdings, giving the company controlled by billionaire John Whittaker nearly 20% of its shares.
Simon’s move will step up pressure on Capital shareholders ahead of Monday’s extraordinary general meeting, at which a vote on the Trafford proposal and share placing will be held. Simon, based in Indianapolis, accused Capital of overpaying for the Trafford Centre and said the deal would destroy the value of the company.
The major shareholder wanted the acquisition to be put on hold while it looked at a possible takeover bid for Capital, but the British company has so far given its pursuer short-shrift in the absence of any firm offer.
Capital said the acquisition would cement its position as the leading UK shopping centre group with 14 centres, including four of the country’s top six out-of-town destinations.
In an open letter to Capital, David Simon, chief executive of Simon, said the latest proposal answered any objections previously expressed by Capital.
He said: “We believe our proposed offer is highly favourable and attractive to CSC shareholders. 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’s proposal of 425p per share is a 7% premium to Capital’s closing price on Tuesday of 396p, and a 26% premium to its share price on November 24 – the day before Capital announced the proposed Trafford acquisition.