Simon is offering 425p a share, including a 10p dividend, but Capital believes this undervalues the company and its prospects. It said: "Capital owns an irreplaceable and unrivalled portfolio of regional shopping centres, built up over 30 years, that is impossible to replicate." Capital's shares climbed 19.3p to 415.6p, with some analysts saying Simon would have to pay up to 450p to win the day.
Simon's actions have been prompted by Capital's recent decision to pay £1.6bn for Manchester's Trafford Centre, in a deal which would see the centre's current owner, Peel Group, take a 19.9% stake in Capital and have board representation. This would leave Peel as Capital's largest shareholder, overtaking South African entrepreneur Donald Gordon. Simon, which owns 5.1% of Capital, claims the deal gives Peel control of Capital without paying a premium, and adds, for good measure, that the company is paying too much for the Trafford Centre.
Initially, Simon called for shareholders to block the Trafford Centre deal, but over the weekend it proposed an alternative method of financing the purchase. This would have involved Capital issuing new shares to Simon, giving it a stake of up to 27% while leaving Peel with just a small shareholding. Capital and Peel both dismissed the suggestion, so Simon has now reverted to its earlier stance – making its bid for the whole company conditional on the Trafford deal not going ahead.
In a letter to Capital's directors, Simon's chief executive, David Simon, said: "We should work together to announce a recommended offer, and would urge you to listen to calls from your shareholders – many of whom we have spoken to – opposing the Trafford Centre transaction or asking you to adjourn your forthcoming EGM [set for next Monday]."
But Capital said: "This is another attempt by Simon to frustrate the Trafford Centre acquisition without putting forward a proper proposal for Capital's shareholders to consider." It also rejected claims it has failed to talk to Simon, saying it had received a series of contradictory letters from the US group that were released to the media before it had a chance to discuss them.
But it has agreed to postpone the EGM until late January to allow shareholders time to weigh up the proposals, and has asked the Takeover Panel to impose a "put up or shut up" ruling on Simon. Peel refused to comment on the latest developments tonight, beyond saying that it was committed to completing the Trafford Centre transaction with Capital.
Tina Cook at analysts Charles Stanley said that Simon's 425p bid "represents a 13% premium to Capital's net asset value of 377p at 1 November, making the offer worthy of consideration, but not necessarily a done deal (some industry watchers are looking for a 20% premium to net asset value)." For the latest updates PRESS CTR + D or visit Stock Market news Today
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