NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION
FOR IMMEDIATE RELEASE
This Announcement contains inside information
19 March 2018
Hammerson plc ("Hammerson" or the "Company")
Statement re announcement by Klépierre S.A. ("Klépierre")
Hammerson notes the announcement made by Klépierre and confirms that it recently received and rejected a highly preliminary and non-binding proposal from Klépierre regarding a possible cash and share offer for Hammerson (the "Proposal"). The Proposal, received on 8 March 2018, valued Hammerson at a price of 615 pence per share, comprising 50% in new Klépierre shares and 50% in cash.
The approach by Klépierre is unsolicited and entirely opportunistic in its timing, and the Board of Hammerson has unanimously rejected the Proposal on the grounds that it very significantly undervalues Hammerson, its track record of delivery, the quality of its portfolio, its market positions, and the opportunities it has for future value creation.
The Board of Hammerson remains fully committed to the acquisition of Intu Properties plc ("Intu") announced on 6 December 2017 (the "Intu Acquisition"), which the Board continues to believe will deliver significant value for Hammerson shareholders.
David Tyler, Chairman of Hammerson, said:
"The proposal from Klépierre is wholly inadequate and entirely opportunistic. It is a calculated attempt to exploit the disconnect between our recent share price performance and the inherent value of our unique and irreplaceable portfolio which is delivering record results. Klépierre is asking our shareholders to accept a price for their Hammerson shares which is not only at a significant discount to their book value but includes a large element of paper in a company which in our view has a lower quality portfolio and lower growth prospects. The Hammerson Board sees absolutely no merit in Klépierre's Proposal and has unanimously rejected it. The Board strongly advises shareholders to take no action."
The Klépierre Proposal very significantly undervalues Hammerson
The timing of the Klépierre Proposal is entirely opportunistic. Klépierre is attempting to secure control of an exceptional portfolio by exploiting the unduly pessimistic and indiscriminate interpretation of current retail trends which have led to the Company's recent share price weakness. The Proposal price of 615 pence per share represents a significant discount of 20.7% to Hammerson's EPRA NAV per share of 776 pence as at 31 December 2017.
Furthermore, the Board of Hammerson believes that the Company's published NAV does not fully reflect several of the long-term future value drivers underpinning its businesses. These include the growth prospects for its Premium Outlets business together with its Irish and French portfolios, and its outstanding pipeline of prized developments.
Hammerson has a unique portfolio and a clear strategy to deliver significant future value creation
The management team of Hammerson has created an exceptional portfolio of leading European retail destinations. Driven by a strategy to benefit from the rapidly evolving polarisation in retail markets, the portfolio is focused predominantly on leading assets in growing consumer markets and attractive catchments; creating differentiated destinations; and promoting financial efficiency and partnerships.
The Hammerson Board believes that its unique portfolio, at the prevailing share price, is very significantly undervalued, and would in particular note that it:
· has a very high portfolio concentration of "A" grade shopping centres compared to other European retail REITs1, including flagship assets such as the Bullring, Birmingham; Dundrum Town Centre, Dublin; and Les Terrasses du Port, Marseille;
· includes a one-of-a-kind portfolio of European Premium Outlets led by a 50% stake in Bicester Village, and is the only European listed real estate company which provides meaningful strategic exposure to this high growth sector;
· has an enviable development pipeline of retail and leisure destinations in major European cities, including Brent Cross and Croydon, London; Dublin Central Development and the extension of Italie Deux, Paris; and
· has an exceptional long term track record of delivery, generating high-single digit growth over the last five years in earnings (CAGR: +8.3%2), dividends (CAGR: +7.6%3) and EPRA NAV per share (CAGR: +7.4%4) since 2012 (when Hammerson became solely focused on retail).
Hammerson has opportunities to drive significant future value creation through:
· the incremental optimisation of its portfolio through Hammerson's leading asset management expertise;
· focused investment to extend and further enhance existing leading assets, such as the onsite extension at Les 3 Fontaines, Cergy, Paris (7% yield on cost5);
· employing Hammerson's exceptional development skills and long established reputation to deliver its highly compelling prized city development projects; and
· extensions of, and incremental capital investment into, the Premium Outlets platform.
The Intu Acquisition enhances strategic growth and will deliver further value for our shareholders
The Intu Acquisition will combine two high-quality portfolios under Hammerson's management team. Hammerson will become the undisputed market leader in the UK with 19 of the top 30 shopping centres6. Targeted asset disposals will allow for further reinvestment into higher return pan-European opportunities such as Premium Outlets, Ireland and Spain to deliver future value for shareholders.
The Intu portfolio contains a high concentration of large desirable high-footfall assets and has a wealth of value-enhancing leasing and asset opportunities that can be unlocked by Hammerson's superior management expertise. The considerable overlap of the two operating platforms presents significant opportunity for efficiencies, with approximately £25 million of cost synergies per annum, and further potential synergies from operational improvements and refinancing opportunities.
The Klépierre Proposal has material disadvantages for Hammerson shareholders
The Hammerson Board believes that Klépierre's property portfolio is of materially lower quality than that of Hammerson. Furthermore, there appears to be limited commercial rationale behind the proposed combination. The consequence for Hammerson shareholders is that the Proposal would result in minority ownership of a less attractive portfolio with lower growth prospects. Hammerson shareholders should note the following:
· Klépierre has an inherently lower quality portfolio. According to independent research analysts Green Street Advisors, 94% of Hammerson's shopping centre portfolio (by GLA) is "A" grade compared to only 50% of Klépierre's portfolio7;
· Klépierre's exposure is spread over a wide range of countries of varying levels of attractiveness, whereas Hammerson and Intu are specialists in scale in the select catchments in which they operate; and
· Klépierre's development pipeline is significantly smaller and fundamentally less attractive than Hammerson's.
There can be no certainty of a firm offer for Hammerson from Klépierre or the terms on which any firm offer might be made. This Announcement is made without the consent of Klépierre.
In accordance with Rule 2.6(a) of the Code, Klépierre is required, by not later than 5.00 p.m. on 16 April 2018, to either announce a firm intention to make an offer for Hammerson in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. This deadline can be extended with the consent of the Panel in accordance with Rule 2.6(c) of the Code.
The person responsible for making this Announcement is Sarah Booth, General Counsel and Company Secretary.
Enquiries:
Hammerson +44 (0)20 7887 1000
David Tyler, Chairman
David Atkins, Chief Executive Officer
Timon Drakesmith, Chief Financial Officer and Managing Director, Premium Outlets
Rebecca Patton, Head of Investor Relations
Catrin Sharp, Head of Corporate Communications
Deutsche Bank (Financial Adviser and Corporate Broker to Hammerson) +44 (0)20 7545 8000
Charles Wilkinson
James Arculus
Rishi Bhuchar
Samantha Forbes (South Africa) +27 (0)11 775 7000
J.P. Morgan Cazenove (Financial Adviser and Corporate Broker to Hammerson) +44 (0)20 7742 4000
Edmund Byers
Massimo Saletti
Paul Hewlett
Adam Laursen
Lazard (Financial Adviser to Hammerson) +44 (0)20 7187 2000
William Rucker
Patrick Long
Will Lawes
Max von Hurter
FTI Consulting (PR adviser to Hammerson) +44 (0)20 7979 7400
John Waples +44 (0)77 1781 4520
Dido Laurimore +44 (0)78 0165 4424
Tom Gough +44 (0)75 8386 3025
Footnotes
1. Based on quality ratings (weighted by GAV) from Green Street Advisors
2. Based on the compound annual increase in Adjusted Earnings Per Share (defined as EPRA Earnings Per Share adjusted for translation movement on intragroup funding loan) from 20.9 pence per share in 2012 to 31.1 pence per share in 2017
3. Based on the compound annual increase in Dividends Per Share from 17.7 pence per share in 2012 to 25.5 pence per share in 2017
4. Based on the compound annual increase in EPRA Net Asset Value Per Share from 542 pence per share in 2012 to 776 pence per share in 2017
5. Based on the estimated total development cost of £225 million and target rent of £16 million, as disclosed in the Company's 2017 Full Year Results Presentation on 26 February 2018
6. Top shopping centres on the basis of PMA Retail Score (December 2016)
7. Based on quality ratings (weighted by GLA) from Green Street Advisors
Further information
Deutsche Bank AG is authorised under German Banking Law (competent authority: European Central Bank) and, in the United Kingdom, by the Prudential Regulation Authority. It is subject to supervision by the European Central Bank and by BaFin, Germany's Federal Financial Supervisory Authority, and is subject to limited regulation in the United Kingdom by the Prudential Regulation Authority and FCA. Details about the extent of its authorisation and regulation by the Prudential Regulation Authority, and regulation by the FCA, are available on request or from www.db.com/en/content/eu_disclosures.htm. Deutsche Bank AG, acting through its London branch ("DB London") is acting as financial adviser and corporate broker to Hammerson and no other person in connection with this Announcement or any of its contents. DB London will not be responsible to any person other than Hammerson for providing any of the protections afforded to clients of DB London, nor for providing any advice in relation to the acquisition or any other matter referred to herein. Neither DB London nor any of its affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of DB London in connection with this Announcement, any statement contained herein or otherwise.
J.P. Morgan Securities plc, which conducts its UK investment banking business as J.P. Morgan Cazenove, is authorised by the Prudential Regulation Authority and regulated by the FCA and the Prudential Regulation Authority in the United Kingdom. J.P. Morgan Cazenove is acting exclusively as financial adviser to Hammerson and no one else in connection with the matters set out in this Announcement and will not regard any other person as its client in relation to the matters set out in this Announcement and will not be responsible to anyone other than Hammerson for providing the protections afforded to clients of J.P. Morgan Cazenove or its affiliates, or for providing advice in relation to the contents of this Announcement or any other matter referred to herein.
Lazard & Co., Limited, which is authorised and regulated in the United Kingdom by the FCA, is acting exclusively as financial adviser to Hammerson and no one else in connection with the acquisition and will not be responsible to anyone other than Hammerson for providing the protections afforded to clients of Lazard & Co., Limited nor for providing advice in relation to the acquisition or any other matters referred to in this Announcement. Neither Lazard & Co., Limited nor any of its affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Lazard & Co., Limited in connection with this Announcement, any statement contained herein or otherwise.
Rule 2.9 information
In accordance with Rule 2.9 of the Code, Hammerson confirms that, as at close of business on 16 March 2018, being the last Business Day before the date of this Announcement, it has 794,227,196 ordinary shares of £0.25 each in issue and admitted to trading on the London Stock Exchange. Hammerson currently holds no ordinary shares in treasury.
Overseas jurisdictions
The release, publication or distribution of this Announcement in jurisdictions other than the United Kingdom may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the United Kingdom should inform themselves about, and observe, any applicable requirements. The information disclosed in this Announcement may not be the same as that which would have been disclosed if this Announcement had been prepared in accordance with the laws of jurisdictions outside the United Kingdom.
Disclosure requirements
Under Rule 8.3(a) of the Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 p.m. (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 p.m. (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 p.m. (London time) on the business day following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.
International Securities Identification Number and Legal Entity Identifier ("LEI")
The International Securities Identification Number for Hammerson's ordinary shares is GB0004065016 and Hammerson's LEI number is 213800G1C9KKVVDN1A60.
Publication of this Announcement
In accordance with Rule 26.1 of the Code, a copy of this Announcement will be available on Hammerson's website at www.Hammerson.com/investors by no later than 12 noon (London time) on the business day following this Announcement.
