Intu Properties PLC (LON:INTU) shares tumbled more than 36% on Thursday as it said a consortium led by billionaire shareholder John Whittaker had thrown out plans to buy the shopping centre owner due to market uncertainty.
The consortium, which included Peel Group, the Olayan Group and Brookfield Property Group, earlier this month made a proposed indicative offer of 210.4p per share for Intu.
The deadline for the consortium to make a firm offer for Intu had been extended twice but Intu said it would abandon the takeover plan due to the “uncertainty around current macroeconomic conditions and the potential near-term volatility across markets”.
READ: Intu Properties "put up or shut up" deadline extended by eight days
Intu added: “Whilst market sentiment towards retail and retail property remains negative, intu is confident of its commercial prospects which are underpinned by market leadership in UK regional shopping centres, clear focus on the highest quality assets and resilient operational performance in a challenging market, as evidenced in this announcement and the previous trading update issued on 23 October 2018.”
Intu maintains 2018 guidance for rental income but plans to chop dividend
The property group confirmed its 2018 expectations for like-for-like net rental income growth of 0% to 1%, following the collapse of tenants Coast and House of Fraser. It expects a similar level of growth in 2019, subject to no new material tenant failures.
READ: Intu Properties takes hit from collapse of House of Fraser and Coast
Intu said it was considering further disposals to provide more headroom for investments in its capital investment programme for fitting out, upgrading and expanding stores. The group will also look at alternative uses of some of its available land including residential, hotel, office, flexible working and other opportunities.
“However, given the heightened macroeconomic uncertainty and the reduced pool of potential buyers at present for UK shopping centres, asset disposals are expected to be challenging to deliver in the next few months,” it said.
“intu therefore intends to substantially reduce the payment of dividends in the short term, starting with the 2018 final dividend, which per intu's normal financial calendar would be payable in June 2019, to provide additional funds to continue intu's investment programme.”
In April Hammerson pulled out of a £3.4bn acquisition to buy Intu, blaming the deterioration of the stock market’s view of Intu.
Two ditched takeover attempts should ring alarm bells with shareholders, says analyst
AJ Bell investment director said the fact that two prospective buyers have taken a good look at Intu and turned their noses up should ring alarm bells with shareholders.
“The company is now left in a difficult position with too much debt, retail assets which would be difficult to sell, and the prospect of losing tenants. On top is the looming departure of chief executive David Fischel," he said.
“A cut to the dividend will help provide some short-term breathing room for the company but more radical action will be required to ensure the long-term viability of the business.
In mid-morning trading, shares were changing hands at around 122p each.