Peel Group chairman John Whittaker says the sale of the Trafford Centre to Capital Shopping Centres (CSC) is in line with his long-term vision and has nothing to do with money.

The acquisition of the Trafford Centre, which has taken four years of negotiations, is expected to strengthen CSC’s position as the leading operator of pre-eminent UK regional shopping centres and enhance the quality of its portfolio.

Today’s extraordinary general meeting will see shareholders of CSC vote on the acquisition and, should they approve, CSC will own 14 UK shopping centres, including 10 of the top 25 and four of the top six out-of-town shopping centres.

CSC would be fortunate to lay its hands on the Trafford Centre as it would increase the company’s presence in the key northwest regional retail market, alongside Manchester Arndale.

Speaking to the media invited to tour the Trafford Centre recently, Mr Whittaker, who will join the board of CSC as nonexecutive director and deputy chairman, says the deal will provide an opportunity to combine management and best practices across the two companies.

“Peel’s objective is to be a long-term supportive shareholder in CSC. We were never interested in the money because if we were, we could have sold a long time ago.

“For me, this has to do with the group taking a step backward in order to take three steps forward,” he says. Mr Whittaker, who is the 34th-richest individual in Britain, says his sale of the Trafford Centre has more to do with his having a long-term vision for the centre, which is rapidly expanding, with further developments envisioned.

“We want to merge with CSC because they own the best regional shopping centres and that sits very well with our vision for the Trafford Centre.”

Mr Whittaker says he sees the deal with CSC as a merger.

“We still have future-proof plans for the Trafford Centre and I think our plans will work very well with CSC plans. So this deal is not about money but how the two companies can best realise that vision.”

He says his group has been in talks with Sir Donald Gordon and his family for three to four years about a possible merger and that they had seen the logic and value of the deal.

CSC is 13,7% owned by the Gordon family. “We are longterm investors and not just interested in short-term benefits. I think the combination of skills in the Trafford management and CSC will drive long-term growth,” Mr Whittaker says.

Lancashire-born but now based on the Isle of Man, the tycoon is a leading developer in northwest England through his Peel empire. Among its assets are the Trafford Centre, Liverpool’s John Lennon Airport and the Manchester ship canal.

Mr Whittaker, backed by a Saudi tycoon, took Peel Group private in 2004 and soon afterwards split his empire into separate companies.

CSC CEO David Fischel says he now sees no reason why shareholders cannot approve the £1,575bn deal.

Simon Property Group (SPG), a shareholder in CSC, had previously opposed the Trafford Centre acquisition, but has not made a firm offer for CSC.

CSC, under pressure from its shareholders, cut its latest offer price for the Trafford Centre, which is to be settled in shares, by 8,7%, and will now issue those shares at 400p per share as opposed to the original 368p per share.

CSC is in effect issuing fewer shares in the revised offer.

It will issue 205,9-million new shares to Peel Group, down from the 224,1-million previously agreed upon.

But SPG argues that the CSC board has responded to pressure from it and revised the terms of the Trafford Centre acquisition.

SPG says the purchase price for the Trafford Centre is still far too high.

The deal gives Peel a 23,2% stake in CSC, down from 24,7% under the earlier terms.

Under the new offer, which SPG opposes, SPG’s 5,1% stake in CSC would be diluted.

The Trafford Centre deal is almost a done deal now that SPG, the biggest mall owner in the US, has refused to make a firm offer for CSC.

Asked whether he was happy with the cut in the offer price for the Trafford Centre, Mr Whittaker says: “We are obviously not happy, but for us it was never about money.”

The company has a £4,9bn portfolio of 13 shopping centres, nine of which are situated in major British cities.

“As far as we are concerned, a distraction to the deal has been removed,” Mr Fischel says.

“Simon’s (SPG’s) opposition to the deal has been a frustrating aspect to an otherwise great merger,” he says.

Source: Business Day