January 7, 2011 / 7:50 AM / 9 years ago

UPDATE 4-CSC cuts Trafford Centre price in Simon bid defence

* Cuts shares offered for Trafford Centre 8 pct to 205.9 mln

* CSC says its potential NAV as much as 625 pence per share

* Simon Prop says CSC trying to frustrate its takeover bid

* Simon says to oppose Trafford deal on Jan 26 meeting

* Simon shares rise 1.6 pct, CSC close down 2.6 pct

(Adds Simon statement, analyst note)

By Karen Foster and Daryl Loo

LONDON, Jan 7 (Reuters) - Capital Shopping Centres (CSC) CSCG.L cut the price it is offering for the Trafford Centre by 8 percent, boosting the British mall owner’s defence against U.S. peer Simon Property’s (SPG.N) 2.9 billion pounds ($4.5 billion) approach.

CSC, Britain’s largest mall owner, said on Friday it would issue 205.9 million new shares to Trafford Centre owner Peel Group, down from the 224.1 million previously agreed.

Peel accepted the new terms which valued the deal at 863 million pounds, based on CSC’s close at 419.1 pence per share on Thursday. That was above the 400 pence the two sides agreed to value the new CSC shares at, up from an earlier 368 pence.

“The repricing of this transaction reflects my strong belief in the growth yet to come at CSC,” said John Whittaker, Peel Group’s billionaire head. The deal gives Peel a 23.2 percent stake in CSC, down from 24.7 percent under the earlier terms.

CSC is attempting to fend off Simon’s 425 pence per share offer for its business, a bid that came after CSC launched its move to buy the Trafford Centre. Simon’s 5.1 percent stake in CSC would be diluted by the Peel deal, which it opposes.

Simon, the biggest U.S. mall owner, must formalise its bid by Wednesday under English takeover law. [ID:nLDE6BG1OK]

CSC said its net asset value — a value gauge commonly used by real estate investment trusts (REITs) — could be as high as 625 pence per share, and the revised acquisition alone implied an NAV as high as 536 pence.

Evolution analyst Aaron Carter said: “We all thought it was worth maybe 450 pence max, against a stated NAV of 375 pence. Turns out the company’s worth over 2 billion pounds more than anyone thought,” he said in a note.

By 1715 GMT, Simon’s shares rose 1.7 percent. CSC’s London-listed shares closed down 2.6 percent at 418 pence.

“WISHFUL THINKING”

Indianapolis-based Simon said in a statement that CSC’s NAV valuation of 625 pence was “wishful thinking” and that its publication “seems designed to frustrate an offer from Simon”.

The biggest U.S. mall owner, which owns a 5.1 percent stake in CSC, added it intends to vote against the Trafford deal at a CSC meeting on Jan. 26, and urged its fellow CSC investors to do the same as the transaction would dilute existing shareholders.

Simon declined to comment when asked if the company is still planning to make an offer for CSC.

“There is now no scope for a recommended offer from Simon emerging before the put up or shut up deadline of Jan. 12,” said Michael Burt at Execution Noble, a stockbroker.

Simon has to move close to 500 pence for a more realistic offer, Burt said.

Simon has said it would not buy CSC if the Trafford deal went through. After Simon urged CSC shareholders to oppose the deal at a meeting scheduled for Dec. 20, CSC moved the date to Jan. 26, saying it needed more time to inform shareholders.

Simon’s third attempt to acquire CSC comes as real estate investors have been showing a renewed interest in British malls, which they expect to rise in value as the local economy stages a tentative recovery. [ID:nN12170729] (Editing by Douwe Miedema and Dan Lalor)

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