US property group scraps bid for Britain's biggest mall owner

Simon Property Group has backed down on a £2.9bn bid for Capital Shopping Centres, Britain's largest mall owner. The US group said the CSC board had refused to share due diligence information. Simon, the biggest US mall owner, owns 5.1% of the British company and had to formalise its 425p a share indicative offer by Wednesday under UK takeover rules. "Despite numerous overtures from Simon and in full knowledge that Simon, given this due diligence precondition, is not able to announce a firm offer without it, the CSC board has refused to share any due diligence information with Simon," the company said this morning. Shares in CSC fell 6.5p, or 1.66%, to 386p on the news, after losing 4% yesterday . Last week analysts at HSBC predicted that the shares could drop to their target price of 310p if a bid did not materialise. CSC had argued that Simon's approach was opportunistic and undervalued the company by up to £1.3bn. Simon will now focus on opposing CSC's acquisition of Manchester's Trafford Centre, which it argues will transfer significant control of CSC to John Whittaker's Peel Group, the owner of Trafford, at a discounted price. CSC has called a meeting on 26 January where it will seek shareholders' approval for the deal, which would add a fourth major shopping centre to its 13-strong mall portfolio. On Friday CSC revised the terms of the Trafford deal to win over investors, but Simon still believes the price is too high and urged other shareholders to join it in voting against the acquisition. The US firm also accused CSC of "wishful thinking" when it published new estimates that show the business could be worth up to 625p a share. "With only 50% acceptances required to approve the transaction at the EGM on 26 January, we expect the Trafford Centre deal to be comfortably voted through despite Simon's opposition," said BESI Execution Noble analyst Michael Burt. "Simon has described the potential net asset value figure of 625p published by CSC in its defence document as 'wishful thinking' and although it has been used to successfully frustrate a potential offer it also has the potential to haunt the current management team in future. Were CSC's management to fall short of delivering this kind of growth in a reasonable timeframe, there is scope in the longer-term for Simon to return with another cash offer."