Shopping centre giant Hammerson to buy Lakeside owner in £3.4bn deal

If the deal goes ahead it will create Britain's largest property company

The iconic Bullring shopping centre in Birmingham (Getty)

Shopping centre owner Hammerson has struck a deal to take over rival Intu in an acquisition worth £3.4bn.

If the proposed deal goes ahead it will create Britain’s largest property company, worth £21bn.

Hammerson owns Birmingham's Bullring shopping centre and Brent Cross in London, while Intu owns Lakeside in Essex, Manchester’s Arndale Centre and the Metro Centre in Gateshead.

Hammerson CEO David Atkins and chairman David Tyler will lead the company.

“The acquisition creates a leading pan-European platform of desirable retail and leisure destinations which are better positioned to serve the needs of our retailers, excite our customers and support our partners and communities,” said Mr Atkins.

The acquisition will give Hammerson shareholders a 55 per cent stake in the firm and Intu shareholders the remainder.

The new company will retain the Hammerson name and shareholders will vote on the deal next year.

John Strachan, chairman of Intu, said: "A combination of both Intu and Hammerson will create a more resilient, diversified and stronger group that we believe will benefit all our stakeholders.

“Intu offers high-quality retail and leisure destinations in the UK and Spain, which when merged with Hammerson's own top-quality assets in the UK, in France and in Ireland, present a highly attractive proposition for retailers and shoppers in Europe's leading cities.”

Russ Mould, AJ Bell investment director, said the merger was “dramatic, given how Intu’s shares have been down this year amid fears over not just what Brexit may do to consumer confidence but also the fate of bricks-and-mortar retailers at the hands of Amazon and other online rivals".

UK consumer confidence has taken a battering since the decision to leave the EU last year.

Higher inflation – largely as a result of the fall in the pound after the Brexit vote – means consumers are beginning to feel the pinch and are reining in their spending.

The recent interest rate hike to 0.5 per cent has also dampened the consumer mood.