The Boards of Shaftesbury PLC and Capital and Counties Properties PLC (Capco) have confirmed they are in advanced discussions regarding a possible £3.5bn all-share merger of the two companies.
Under the proposed terms of the possible merger, Shaftesbury’s shareholders, excluding the Shaftesbury shareholding owned by Capco, will own 53% of the combined company, and Capco shareholders will own 47% of the combined company.
The possible merger would create a real estate investment trust (REIT) focused on the West End of London with a portfolio of 2.9 million square feet of lettable space located in destinations including Covent Garden, Carnaby, Chinatown and Soho.
The combined ownership would comprise c.1.8 million square feet of retail and hospitality space, together with office and residential accommodation of c.1.1 million square feet.
Capco currently owns c.97 million shares in Shaftesbury, representing approximately 25.2% of the existing share capital of Shaftesbury. The exchange ratio will reportedly not be impacted by the Shaftesbury shares held as security.
The combined company will be led by Jonathan Nicholls, current non-executive chairman of Shaftesbury, as chairman, and Ian Hawksworth, Capco chief executive, as CEO.
Shaftesbury said the board will contain “strong” non-executive representation from both companies. An executive committee, containing equal representation from the existing Shaftesbury and Capco leadership teams, will be responsible for the day-to-day management and operation of the combined company.
Shaftesbury said that discussions are ongoing and the full terms of the possible merger have not been finalised, and there is no certainty that an offer will be made.
Meanwhile, Brian Bickell, Shaftesbury’s CEO, will retire on completion of the transaction, marking 36 years at the company. Executive directors Simon Quayle and Tom Welton, who have also been with the company for over 30 years, will also leave the business.
Additionally, Henry Staunton, Capco chairman, and Jonathan Lane, non-executive director, will retire from the board of capco on completion.