Intu bid approach 'well timed', says Berenberg
Berenberg downgraded its stance on Intu Properties to 'hold' from 'buy' on Friday as it cut the price target down to 210p from 230p, in line with the indicative offer the shopping centre owner has received from a consortium led by one of its senior directors.
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Intu said earlier that deputy chairman John Whittaker's Peel Group, which already holds around 27% of the firm, had teamed up with Saudi conglomerate Olayan Group and Canary Wharf owner Brookfield Property to offer 210p a share, valuing the company at £2.8bn.
The consortium had initially offered 205p a share, which was raised to 215p after talks between the two parties. The 210p factors in dividend payouts in November, Intu said.
Berenberg said there is a clear rationale for the bid and the process is likely to complete.
"Unlike the last Hammerson approach, this time we see a clear rationale for a bid and think it more likely than not that the process will see Intu leave the public markets at a price in line with the indicative proposal.
"This approach was well timed; sentiment for both UK retail REITs and the wider retail sector is at its most bearish, Intu has no long-term CEO in place (with no further comment on succession) and the shares were trading at a 57.5% discount to CY 2018 NAV."
Should the consortium walk away, Intu’s shares would almost certainly fall to a lower level. "Although there would be little earnings impact, sentiment would undoubtedly deteriorate further, while asset sales, necessary to maintain the LTV within target range, are likely to be delayed, increasing balance sheet pressure."
However, Berenberg added that this would only be temporary.
At 1430 BST, the shares were up 12% to 199.10p.