Hammerson Plc and Intu Properties Plc agreed to a merger that will result in an entity with a £21 billion pan-European retail and leisure portfolio.
The boards of both companies signed a deal for an all-share acquisition of Intu's entire issued and to-be-issued share capital by Hammerson, according to a release.
Under the deal, Intu shareholders will receive 0.475 of a new Hammerson share for each Intu share, equating to £3.4 billion for the target company's entire issued and to-be-issued share capital. The deal terms reflect a value of roughly 253.9 pence per Intu share based on Hammerson's closing price of 534.5 pence per share as at Dec. 5.
The terms represent a premium of roughly 27.6% over Intu's closing price of 199 pence per share as at Dec. 5 and a premium of roughly 19.2% over the volume weighted average price of 213 pence per Intu share for the three-month period ended Dec. 5.
Hammerson shareholders will own roughly 55% of the issued share capital of the combined company, with Intu shareholders owning the remaining 45%.
Hammerson's board anticipates pretax synergies for the merged entity to reach a yearly run-rate of roughly £25 million by the end of the second year following the closing of the deal. One-off integration cash costs are expected to weigh in at roughly £40 million, resulting from the realization of the cost synergies.
The new company, which will be called Hammerson plc, will continue to use the "intu" consumer brand for its retail center portfolio.
Present Hammerson CEO David Atkins and CFO Timon Drakesmith will respectively take on the same roles in the combined company. Present Hammerson Chairman David Tyler will also be the chairman of the combined company.
Intu's deputy chairman, John Whittaker, will take on the same position in the merged entity, while Intu Chairman John Strachan will be on the combined company's board as senior independent director. The resulting company will have six directors nominated by Hammerson and four nominated by Intu.
Intu's board intends to unanimously recommend that its shareholders vote to approve the deal. With respect to their own holdings in the company, Intu's directors have signed irrevocable undertakings to vote in favor of the merger.
The acquisition is expected to become effective in the fourth quarter of 2018, subject to the satisfaction or waiver of necessary conditions.
Deutsche Bank, J.P. Morgan Cazenove and Lazard acted as financial advisers to Hammerson, with Deutsche Bank and J.P. Morgan Cazenove also serving as corporate brokers.
Rothschild served as lead financial adviser to Intu, with BofA Merrill Lynch and UBS acting as joint financial advisers and corporate brokers.
