Capco and Shaftesbury, two leading West End landlords, are reportedly in advanced talks about merging their companies. The merger, which would value the joint firm at approximately £3.5 billion, has been the subject of speculation for several years. If the deal goes ahead, it would create a London super-landlord.
Capco, also known as Capital & Counties Properties, has a strong presence in Covent Garden, while Shaftesbury owns properties in neighboring areas such as Seven Dials, Carnaby, and Chinatown. The proposed merger would involve an all-share transaction, and an announcement of the agreement is expected within weeks, according to sources. However, neither company has made any official comments on the matter so far.
The possibility of a merger between Capco and Shaftesbury first arose in May 2020 when Capco purchased a 26% stake in Shaftesbury for £436 million. This transaction occurred as property tycoon Samuel Tak Lee sold his holding. The COVID-19 pandemic severely impacted landlords as stores were forced to close, leading to tenants withholding rent and many retailers going out of business. London landlords also faced challenges as office workers and international tourists stayed at home. The difficulties faced by restaurant chains further exacerbated the situation.
In response to the financial challenges brought about by the pandemic, Shaftesbury raised £300 million by selling shares in autumn 2020. Capco participated in this capital raising initiative, demonstrating their commitment to weathering the storm. While retail footfall is still lower than pre-pandemic levels, major shopping destinations, including those owned by Capco and Shaftesbury, have seen an increase in new tenants. This positive trend provides hope for the future. Shaftesbury recently announced that its vacancy rate has dropped below 5% for the first time since the pandemic began, indicating a promising outlook. Capco’s CEO has also expressed optimism, highlighting that leasing demand has contributed to an increase in property values.
If the merger between Capco and Shaftesbury comes to fruition, it would create a London super-landlord with a significant presence in prime locations. This would allow the combined firm to leverage its extensive property portfolio and potentially benefit from the recovery of the retail and real estate sectors in the post-pandemic era. The ongoing talks have attracted attention from industry observers who are eagerly anticipating the outcome and the potential impact on London’s property market.
Useful links:
1. Capco
2. Shaftesbury
