In-depth: EventCity owner set to win control of Capital Shopping Centres
14-Jan-11by Annie Byrne
The owner of Manchester’s new EventCity is expected to secure a controlling stake in retail property developer, Capital Shopping Centres (CSC), after its rival withdrew a competing bid.Peel Group was vying against retail property developer US-based Simon Property Group for control of CSC, which owns 14 retail complexes across the UK. The jostle for command was triggered by Peel’s £1.6bn all-share bid handing over its Trafford Centre complex in Manchester to CSC in return for a controlling stake in its operations. Peel Group also owns EventCity, a 24,000sqm exhibition space beside Trafford Park which opens for exhibition business from February.Simon Property Group, a 5.1 per cent minority CSC shareholder, urged other investors to reject the bid, on the grounds that it undervalued CSC. It countered with an offer in December to buy all CSC shares at 425 pence per share, or £2.9bn. Merrill Lynch and UBS subsequently valued the shares 50p higher.On 11 January Simon Property Group officially withdrew its offer, attributing its decision to CSC’s refusal to open its books for due diligence. During an extraordinary general meeting (EGM) on 15 December, CSC’s board dismissed Simon Property Group’s proposal but recommended the Trafford acquisition. Simon Property Group was given until 12 January to come back with a better deal to Peel or walk away. “The Board of CSC believes that this [£2.9bn bid] is yet another attempt by Simon to frustrate the Trafford Centre acquisition without putting forward a proper proposal for CSC shareholders to consider as an alternative, and accordingly unanimously rejects the Proposal,” the company stated in its December letter to shareholders. On 7 January, Peel submitted an amended acquisition proposal to CSC giving it 100 per cent ownership of the Trafford Centre and a multi-million dollar cash injection in return for a 23.2 per cent company stake, valued at 400p per share. The original deal, first tabled in November, would have given Peel a 24.7 per cent stake with shares valued at 368p apiece. The Trafford Centre was valued at £1.65bn on 1 November 2010 by external investors. Should the latest offer of a tie-up get the final sign-off from CSC shareholders, Peel founder and owner John Whittaker will become the company’s deputy chair and a non-executive director.According to both Whittaker and CSC, the deal significantly increases CSC’s North West retail presence, enhances its portfolio and provides the opportunity to combine management while increasing the Trafford Centre’s value. “The Trafford Centre is an outstanding retail and leisure destination in its own right,” Whittaker stated. “Its mix of retail, entertainment, theatre, leisure and sporting facilities has driven significant year-on-year growth in footfall. This successful formula applied to CSC’s portfolio will provide a unique platform for growth for the benefit of all CSC shareholders.”CSC shareholders are now expected to approve the deal at a second EGM on 26 January.