The two companies, which are behind large areas of London’s West End, are in advanced talks to merge the £ 3.5 billion merger, which will bring together world-renowned tourist destinations, including Covent Garden and Chinatown, which are jointly owned.
Sky News has learned that Capital & Counties Properties – also known as Capco – and Shaftesbury are having detailed discussions on linking all the shares, which could be announced in a matter of weeks.
When the merger is completed, the merger will unite two of London’s most prominent landlords, creating a property ownership property in the West End as the capital tries to pave the way for a successful future after the pandemic.
Capco is a landlord of shops and restaurants in Covent Garden, while Shaftesbury owns chunks of other great central London attractions such as Carnaby Street, Chinatown and the Seven Dials.
Speculation about the connection between the two companies has persisted since May 2020, when Capco bought a 26% stake in tycoon Samuel Tak Lee in Shaftesbury for £ 436 million.
One analyst said Norges Bank, Norway’s sovereign wealth fund, is likely to become an important player in the merger because of its large stakes in Capco and Shaftesbury.
Both Capco and Shaftesbury have been hit hard by this coronavirus pandemic, with the latter raising about £ 300 million from the sale of shares in the autumn of 2020.
Capco participated in this money call on an interest basis, which allowed it to retain its stake.
Covent Garden owner lost more than a quarter of its value in 2020, reflecting a sharp decline in early visitors COVID-19 crisis.
Two years ago, many commercial property owners were forced to intervene to ease rents to retailers and hotel businesses when dozens of well-known chain stores and restaurants collapsed.
Debenhams, TopShop, Carluccio’s and Prezzo were among the victims who either got into the administration or implemented restructuring plans that hit creditors, including landlords.
However, in recent months, landlords have acquired a more optimistic tone, despite the uncertainty caused by the Omicron option and the transition to hybrid work.
In February, Shaftesbury said vacancy rates had fallen below 5% for the first time since the pandemic began.
Ian Hawksworth, CEO of Capco, said the same month that the outlook had become more positive.
“We are pleased with the high level of demand for leasing in Covent Garden, which helped raise valuations in the second half.
“As the number of visitors continues to grow, customer sales are approaching 2019 and our creativity, Covent Garden is the busiest area of the West End and has a good position for further rental growth,” he added.
On Friday, Capco shares closed nearly 3% higher amid speculation that Capco could be a takeover target for an unnamed suitor.
As a result of the increase, the market capitalization of Capco amounted to about 1.37 billion pounds.
Shaftesbury, meanwhile, closed just under 1% lower at 577 pence, giving it a market value of £ 2.23 billion.
Additional details of the proposed merger structure, including the long-term leadership of the merged group, were unclear on Saturday morning.
However, both companies are likely to be forced to confirm negotiations on the London Stock Exchange when it opens on Monday.
Mr Hawkesworth and his opposite room in Shaftesbury, Brian Bickel, are both respected figures in the commercial real estate sector, although there is no certainty that both will remain in the combined group.
Also the deal may have opportunities for significant cost synergies.
Capco’s history dates back to the 1930s, although it did not acquire Piazza Covent Garden until 2006, and Shatesbury, which owns 16 acres in the West End, was founded in 1985 and the following year sailed to London.
Capco is expected to advise Rothschild bankers, while Blackdown Partners and Evercore Partners advise Shaftesbury.
Shaftesbury declined to comment, while Capco contacted for comment.