There’s renewed uncertainty over the future of the Croydon town centre redevelopment by Westfield, after the developers’ parent company announced in Sydney overnight that it is the subject of a £18.5billion takeover bid from French company Unibail-Rodamco.
The deal, which is subject to regulatory and share-holder approval, represents the biggest takeover of an Australian company on record. By acquiring Westfield’s 35 shopping centres in the United States and United Kingdom, Unibail-Rodamco will create the world’s largest mall operator. The French company said today that it plans to re-brand all its malls with the red Westfield logo.
The deal is a second major retail deal in a week, after Hammerson’s takeover of Intu for £3.4billion.
Westfield and Hammerson came together in Croydon in 2012 to form Croydon Partners to jointly deliver the redevelopment of the ageing Whitgift Centre and the unloved Centrale with a scheme, currently valued at £1.4billion, which now includes nearly 1,000 homes and which was granted planning permission by Croydon Council for a second time last month.
Today, international news agency Reuters described the Unibail-Rodamco takeover of Westfield as accelerating the “… consolidation of the global retail property sector as it grapples with challenges from online retailers led by Amazon”.
John Burton, Westfield’s London-based director who has overseen the company’s developments at Stratford, Shepherd’s Bush and Croydon, was “in meetings” this morning and not available for comment. His boss, Sir Frank Lowy, the company’s founder and chairman, is in London this week.
The takeover will have far-reaching implications for the company, as it will end a 60-year association with the Lowy family. Lowy is a Holocaust survivor and refugee who was knighted for his services to business. He opened his first shopping centre in Australia in 1959.
“Unibail-Rodamco’s track record makes it the natural home for the legacy of Westfield’s brand and business,” Sir Frank said in a statement issued to the Sydney Stock Exchange earlier today.
If the deal goes through he and his two sons, Steven and Peter, Westfield’s co-chief executives, will walk away from the boardroom.
New management, with their own ideas and business priorities, might take a different view of the potential of spending so much cash on a suburban south London shopping centre which, first announced in 2012, has been stalled by wary developers since 2015. According to the Croydon Partners last month, work in Croydon is now not due to begin until 2019, with the centre opening for business in late 2022 – five years later than originally planned.
According to Reuters, “Shopping centre owners around the world are scrambling to reinvent themselves to keep up with rapid changes in consumer behaviour and boost earnings.
“The expansion of e-commerce giant Amazon.com has coincided with an explosion in online purchases of physical goods, while consumers increasingly treat malls as places for socialising.
“Once dominant United States department store operators such as Macy’s and JC Penney have announced plans to shut hundreds of stores in recent years, putting pressure on landlords to find new ‘anchor tenants’ or come up with new ways to grow returns.”
Westfield gets almost 70 per cent of its US$1.8billion annual revenue in America. The only “anchor tenant” secured so far for its Croydon centre is Marks and Sparks.
“Westfield has been seen as a pioneer in US mall redevelopment, melding traditional mall retailers with atypical mall fixtures like upscale food courts, high-end restaurants, bars, cinemas and boutique fashion outlets,” Reuters reports.
Sir Frank Lowy said, “This is obviously a day of mixed emotions for me although I am 100 per cent comfortable with our decision.” He said the deal had taken just six weeks to reach an agreement.
The Lowys said they chose to sell as they would rather be investors than executives now, after putting in a combined 145 years at the company.
Westfield are generous donors to the Conservative Party in Britain. The company’s shares are headed for their worst year since 2011. The Unibail offer, at Aus$10 per share, is almost 18 per cent higher than Westfield’s stock price at close of trading on Monday. The offer has been unanimously recommended by Westfield’s board.
The takeover will create a property group with a gross market value of £53.9billion, positioned across 27 markets and cities across the world. The joint portfolio will consist of 104 assets attracting 1.2billion visits a year. It is also thought to have the world’s largest development pipeline of £10.85billion, which, according to Property Week, “is focused on flagship assets in key markets”. And Croydon.
Christophe Cuvillier, chairman of the management board and chief executive of Unibail, said: “The acquisition of Westfield is a natural extension of Unibail’s strategy of concentration, differentiation and innovation. It adds a number of new attractive retail markets in London and the wealthiest catchment areas in the US. It provides a unique platform of superior quality shopping destinations supported by experienced professionals of both Unibail and Westfield.
“We believe that this transaction represents a compelling opportunity for both companies to realise benefits not available to each company on a standalone basis, and creates a strong and attractive platform for future growth.”
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