Intu shares fell to record lows after Peel Group, which is the vehicle of Intu’s deputy chairman and major investor John Whittaker, Canadian property firm Brookfield and Saudi Arabia’s Olayan Group said macroeconomic uncertainty and potential market volatility meant they would not submit an offer.
David Fischel, Intu’s chief executive, blamed mounting concern about Britain's impending exit from the European Union for the collapse of takeover talks.
"The escalation in the news around Brexit and all the potential ramifications has obviously ramped up a lot in the last couple of weeks and has made it a very hard climate to make a big investment decision," he told Reuters.
Intu also said in response to the consortium's withdrawal that it would "substantially" cut its dividend this year to conserve cash to invest in the business, dealing a further blow to shareholders in the company behind sites such as Manchester's Trafford Centre.
Its shares plunged 37 percent to 121.3 pence, almost half the 210.4 pence level of the consortium’s proposed bid.
The failure of the takeover leaves the shopping centres group in a "challenging position," analysts at Liberum said in a note.
It also comes as Intu faces a leadership crossroads, with Fischel intending to leave once a successor is appointed after more than 17 years at the helm of the business.
The Liberum analysts said that cutting shareholder payouts was "sensible" and added: "This could be an opportunity for a new CEO, but grasping this nettle would likely crystallise further short-term pain in addition to the risk of continued market weakness."
BREXIT FEARS
The consortium's u-turn comes after rival shopping centres group Hammerson abandoned a 3.4 billion-pound deal to buy Intu in April amid investor concerns a takeover would increase Hammerson’s exposure to Britain’s troubled retail sector.
Landlords have been under pressure this year from the rise of online retailing and waning consumer sentiment caused by Brexit, which have hit shopping at bricks-and-mortar stores.
Brexit-related uncertainty has surged in recent weeks, compounding the situation just as Whittaker’s consortium was considering a takeover.
The approach to Intu was announced on Oct. 4. Since then, British Prime Minister Theresa May has faced a growing political backlash after she struck an exit deal with Brussels earlier this month that has attracted ferocious criticism from many UK MPs, stoking fears Britain could crash out of the EU without a withdrawal agreement.
"I don't think anyone was quite prepared for the level of uncertainty that we're now seeing as to which scenario is going to be the one that eventually happens," Fischel said.
Peel Group and Olayan together hold 29.9 percent of Intu, with the bulk of that stake owned by the Whittaker family.
Billionaire Whittaker became Intu’s biggest investor in 2011 when he sold the Trafford Centre to Capital Shopping Centres, which was subsequently renamed Intu.
He said on Thursday that "we remain fully committed to Intu Properties as a long-term, strategic shareholder."
(Reporting by Ben Martin in London and Arathy S Nair in Bengaluru; editing by Sai Sachin Ravikumar and Emelia Sithole-Matarise)
By Ben Martin and Arathy S Nair
