Hammerson surges after rejecting £5bn bid from France's Klepierre

The 615p a share offer made on 8 March, which represents a premium of around 40.7% to Hammerson's closing price last Friday, comprised 50% in new Klepierre shares and 50% cash.

Hammerson said the offer, which was rejected in less than 24 hours, was "unsolicited and entirely opportunistic in its timing". It was unanimously rejected on the basis that it "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".

Chairman David Tyler said: "The proposal from Klepierre 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. Klepierre 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 Klepierre's proposal and has unanimously rejected it. The board strongly advises shareholders to take no action."

Klepierre said it had made the proposal "on a non-adversarial basis" and "with the intention of engaging in a constructive dialogue regarding a possible offer to acquire the issued and to be issued share capital of Hammerson on a standalone basis".

Hammerson, which agreed at the end of last year to buy Intu Properties for £3.4bn, said it remains committed to the deal, which "will deliver significant value" for its shareholders.

It added that 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 £25m of cost synergies per annum, and further potential synergies from operational improvements and refinancing opportunities," it said.

Numis said that when Hammerson announced its intention to buy Intu on 6 December, it highlighted the potential for Klepierre to seek to disrupt the party. Although it expected the shares to rally on the back of Klepierre rejection, it said that given Hammerson management has summarily rejected the offer, the stock should come under downward pressure again following any bounce.

"The fixed nature of the Hammerson/Intu merger ratio (0.475 Hammerson shares for every one Intu share), makes the initial Intu share price reaction harder to call. If Hammerson's share price rally is sustained, that would imply the market believes the Klepierre bid could be successful and thus Intu's shares should drop as it moves back to being appraised on a stand-alone, as-is basis.

"However, if the market holds little stock by a Klepierre/Hammerson tie-up, then Intu's share price response should be more aligned to Hammerson."

At 0940 GMT, Hammerson shares were up 26% to 551.40p.