Shopping Centre

Simon plots rival Trafford Centre deal

Published:  14 December, 2010

US retail property giant raised the stakes in its row with Capital Shopping Centres over the £1.6bn purchase of the Trafford Centre

Over the weekend Simon again wrote to the CSC board, making an alternative offer to finance the Trafford Centre purchase, but the offer was immediately rebuffed.

Under the existing deal CSC plans to pay Peel in shares for the centre, leaving Peel with a major shareholding in CSC and a seat on the board for its owner John Whittaker. Now Simon has proposed that CSC sells shares to Simon for cash, which can then be used to make a cash offer for the Trafford Centre. This would result in Simon, rather than Peel, holding a place on the CSC board.

Chairman David Simon said: “Our proposal entails a cash placing to Simon at a price that reflects a substantial premium to the terms of the existing Peel transaction and is much less dilutive to existing shareholders. The cash proceeds of the issue would be payable to Peel, meaning that Peel would receive the cash equivalent of the agreed value without a discount.”

Both Peel and CSC rushed out statements condemning the move. Peel rejected it out of hand, saying: Peel has no intention of selling the Trafford Centre for cash and this has never been an aim of the group - in spite of the fact that Peel has been advised a cash sale would achieve a higher price - and nor does Peel intend entering into such a discussion. Rather, Peel's stated objective is to increase and diversify its exposure to the UK shopping centre market via a long-term investment in CSC.”

And CSC added: “CSC considers that what SPG is suggesting is incapable of implementation and completely impracticable.It is not open to CSC unilaterally to alter the terms of its legally binding contract with Peel. Therefore, what SPG proposes does not provide a genuine alternative for CSC shareholders.”