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David Simon Is Having A £5B Second Crack At The U.K. Shopping Centre Market

Simon Property Group Chairman David Simon

The European shopping centre giant backed by David Simon has made a £5B offer to buy Hammerson, as the U.S. retail titan makes a long-awaited second attempt to enter the U.K. mall market.

Paris-listed Klépierre said it made a very, very preliminary approach about buying Hammerson for 615 pence a share on 8 March, valuing the company at about £5B. Hammerson rejected the offer within 24 hours.

Hammerson has a portfolio valued at £10.6B, across the U.K., France and Ireland, while Klépierre’s is valued at €24B (£21B) across most of Continental Europe but not the U.K. 

Simon Property Group owns 20% of Klépierre, Europe’s second-largest mall owner. It bought the stake in 2012 after its hostile takeover bid for U.K. mall owner Intu was rejected at the end of 2011.

If Klépierre is to buy Hammerson it may also have to take a hostile approach. In its statement the company pointed out its offer represented a 40% premium to Hammerson’s share price. But Hammerson said the approach was “opportunistic” and designed to exploit “the unduly pessimistic and indiscriminate interpretation of current retail trends which have led to the company's recent share price weakness”.

In an ironic echo of the defence put forward by Intu when it rejected Simon’s offer in 2011, Hammerson pointed out that its portfolio was a collection of irreplaceable prime assets that are worth more than the sum of their parts.

Klépierre said in its statement there was no guarantee it would make a full offer for Hammerson.

The approach complicates the £3.4B takeover bid Hammerson has made for Intu, which has malls in the U.K. and Spain, and which would create a company with £19B of assets.

The Times, which first reported the offer for Hammerson by Klépierre, said Klépierre made its move before that takeover went through because it did not want to buy Intu as well.