Analysts at Goldman Sachs have turned bullish on Hammerson (LON:HMSO), pointing to ‘significant potential’ from the FTSE 100 group’s tie-up with smaller London-listed peer Intu Properties (LON:INTU). The two property companies unveiled their merger plans yesterday, with the deal set to create the UK’s largest property company.
Hammerson’s share price, which tumbled yesterday, has recovered in today’s session, having added 3.44 percent to 525.50p as of 14:54 GMT. The stock is outperforming the broader market rally, with the benchmark FTSE 100 index currently standing 0.75 percent higher at 7,375.76 points. Intu’s share price meanwhile is 2.89 percent up at 235.30p, as compared with a 0.71-percent gain in the mid-cap FTSE 250 index.
Goldman Sachs turns bullish on Hammerson
Goldman Sachs lifted its rating on Hammerson to ‘buy’ today, arguing that the group’s shares now offered 25-percent upside. WebFG News quoted the analysts as saying that the deal would ‘significantly enhance’ the company's power in a polarising market and generate ‘significant’ efficiencies.
The analysts further hailed the timing of the deal as “a significant success factor in making acquisitions”, with Hammerson having done well in this regard as the offer price stood 12 percent below Goldman’s 12-month price target for Intu, marking a 41-percent discount to the smaller group’s last reported net asset value and implying a 6.3 percent 2017 earnings yield on the bank’s estimates.
Others, however, have been less upbeat, with one senior property investor telling The Times: Hammerson chief executive “David Atkins has clearly gone for a shock-and-awe type of deal to wake everyone up, but I think is the most stupid deal anyone could have done.”
The investor elaborated that Atkins was “doubling down on UK retail at a very difficult time for retail property which is dwindling”.