Capital and Counties Properties PLC (Capco) and Shaftesbury have announced they have reached an agreement for an all-share merger, valuing the combined group’s portfolio at £5bn with annualised gross income of approximately £165.5m.
Under the terms of the agreement, the Capco Group will own 100% of the issued and to be issued share capital of Shaftesbury on completion, and the merger is reportedly expected to be earnings accretive immediately for Capco shareholders.
Efficiencies in the combined group’s operating structure are expected to generate approximately £12m of pre-tax recurring cost synergies on an annual run-rate basis by the end of the second full year following completion.
Additionally, Capco has entered into a £576m loan to provide funding certainty in the event that the Shaftesbury Mortgage Bond holders exercise their redemption right following completion.
The combined group will be led by Jonathan Nicholls as non-executive chairman and Ian Hawksworth as chief executive. Situl Jobanputra will be the chief financial officer and Chris Ward will be the chief operating officer.
Meanwhile, Brian Bickell will retire on completion of the merger after 11 years as chief executive of Shaftesbury, as will Henry Staunton, Capco’s chairman.
Executive directors Simon Quayle and Tom Welton, who have been with Shaftesbury for 35 and 33 years respectively, will also leave the business on completion.
Overall, the combined group’s portfolio will comprise approximately 670 predominantly freehold buildings, with approximately 2.9 million square feet of lettable space across 2,000 commercial and residential units.
At 31 March 2022, the combined group’s portfolio included 35% retail (approximately £1.7bn), 34% hospitality and leisure (approximately £1.7bn), and 31% offices and residential (approximately £1.6bn).