Simon Property makes 3 billion pounds indicative CSC bid

By Daryl Loo

LONDON (BestGrowthStock) – Simon Property’s (SPG.N: ) last-ditch bid for Capital Shopping Centers (CSCG.L: ), valuing Britain’s biggest mall owner at about 3 billion pounds ($4.8 billion), may be “too little, too late,” analysts said.

The biggest U.S. mall owner made an indicative offer of 425 pence per share on Wednesday, which it said was a 16 percent premium to the price of shares CSC plans to issue to buy Manchester’s Trafford Center in a deal announced November 25.

In a statement, CSC’s board said it was meeting to consider a response to the offer from Simon, its 5.1 percent shareholder.

“Shareholders should be aware there is no certainty an offer will be made nor as to the terms upon which any such offer may be made,” CSC said, taking a similar stance to when it spurned two earlier proposals from Simon.

By 1100 GMT, shares in CSC, owner of 13 regional shopping centers in Britain, had pared gains from 4 percent to 2.6 percent, to stand at 406.7 pence

UK billionaire John Whittaker’s Peel Group is set to take a near-20 percent stake in CSC by selling the Trafford Center to it for 1.6 billion pounds. Peel said on Monday the deal was for a long-term investment in CSC, not for cash.

Whittaker would become deputy chairman of CSC as well as its largest shareholder, potentially complicating future attempts by Simon to buy CSC. The deal is subject to a vote by CSC shareholders on December 20.

“The 425 pence is still only indicative, conditional on the Trafford Center purchase not proceeding at the EGM on Monday. We think it is probably too little, too late,” Nomura property analyst Mike Prew told Reuters.


JP Morgan analyst Harm Meijer said Simon’s offer is not enough to land CSC, but should convince it to provide the due diligence information Simon had requested so it can make a firm acquisition proposal.

“We believe Simon will ‘test the market’ over the coming days and will realize that its indicative offer is not enough … another rabbit out of the hat is needed, but it needs to be a big one,” Meijer said in a note to clients. Evolution Securities analyst John Cahill said it was hard for CSC to recommend an indicative offer to shareholders, “especially when Simon has twice done U-turns on its approach.”

In its letter to CSC, Simon said: “We should work together to announce a recommended offer, and would urge you to listen to calls from your shareholders — many of whom we have spoken to — opposing the Trafford Center transaction or asking you to adjourn your forthcoming EGM.”

Simon said it had appointed Citi (C.N: ), Evercore (EVR.N: ) and Lazard (LAZ.N: ) as financial advisers and was finalizing a bridge loan facility of about 3 billion pounds.

“We are confident that, subject to successful completion of due diligence, we will be able to obtain sufficient resources to satisfy our proposal in full,” Simon said.

($1 = 0.6301 pound)

(Editing by Dan Lalor, Sinead Cruise and David Hulmes)

Simon Property makes 3 billion pounds indicative CSC bid