Property firms Shaftesbury, Capco confirm merger talks

Responding to press speculation over the weekend of a £3.5bn deal, they said: "The possible merger would create a REIT focused on the West End of London with a portfolio of circa 2.9 million square feet of lettable space located in high-profile destinations including Covent Garden, Carnaby, Chinatown and Soho.

"The combined ownership would comprise c.1.8 million square feet of retail and hospitality space, together with office and residential accommodation of c.1.1 million square feet."

Under the terms of the possible merger, Shaftesbury shareholders - excluding the Shaftesbury shareholding owned by Capco - would own 53% of the combined company, while Capco shareholders would own the rest. Capco currently owns around 97m shares in Shaftesbury, which is stake of about 25.2%.

Shaftesbury chair Jonathan Nicholls would become chairman of the combined company, while Ian Hawksworth, chief executive of Capco, would be CEO.

The companies said that Norges Bank, a major shareholder in both property firms, understands the strategic rationale and has signalled its support for them to explore a merger.

Russ Mould, investment director at AJ Bell, said: "Talks between Shaftesbury and Capital & Counties over a merger look logical given both are focused on the West End and both have had to endure a big drop in tourist numbers and wider footfall in central London during Covid.

"Add in the fact that Capital & Counties already has a decent-sized stake in Shaftesbury and this looks like a marriage made in heaven."