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Property Heavyweights Clash In €1.4B Shopping Centre Takeover Deal

Gazit Globe's Chaim Katzman

Two of the best-known figures in the European retail real estate market have locked horns in a takeover deal that highlights the uncertain nature of buying shopping centres today.

Gazit Globe has made a takeover offer for Atrium European Real Estate, which owns a portfolio of shopping centres in Eastern Europe, mainly Poland and the Czech Republic. Gazit was founded by Israeli real estate grandee Chaim Katzman, who founded the company and turned it into a shopping centre giant with $11B (£9B) of assets in Europe, the U.S. and Brazil.

Gazit’s offer of €3.75 a share values Atrium at just over €1.4B (£1.26B). It already owns 60% of Atrium, but wants to take it private. The offer has been approved by Atrium’s board, so long as a higher one does not come along before 10 September. 

But one of Atrium’s shareholders, Icamap, wrote an open letter this week to Atrium’s board saying the offer undervalues the company. One of Icamap’s founders is Guillaume Poitrinal, the chief executive of Unibail Rodamco from 2005-2013, and the man who turned it into Europe’s largest listed property company and the second-largest shopping centre owner in the world.

In the letter, Icamap said the bid should value Atrium at between €1.8B and €2B, based on the value of the company’s assets and the value at which shares in other similar companies are trading.

It pointed out the offer price is a 26% discount to Atrium’s most recent net asset value. When recommending the offer, Atrium’s board said it was a premium of 18% to the share price before the offer was announced. So the clash boils down to a question bedevilling listed retail property owners across the world: Which is right, the price at which assets are held on a company’s books, or the price implied by the shares?

Atrium has a fascinating history. It was bought by Gazit and the property investment arm of Citigroup after its share price crashed due to a scandal relating to the purchase of its shares by directors of its former parent company. It was set up as an offshoot of Meinl Bank, itself part of the Austrian Meinl coffee-roasting and finance dynasty. The Meinl directors were ultimately cleared of charges of defrauding investors through share buybacks.