West End landlords Shaftesbury and Capital & Counties Properties (Capco) have agreed to push ahead with a £3.5bn merger, which will see much of London’s beloved theatre district fall under one wing.
The merger, which had raised the eyebrows of one investor, will see shareholders receive 3.35 new Capco shares for each Shaftesbury share.
Combining both portfolios under one company, known as Shaftesbury Capital, will form an around £5bn retail, hospitality and entertainment powerhouse, stretched across 2.9m sq ft of central London.
However, chief investment consultant Chris Hill at Investec, which has a 1.65 per cent stake in Shaftesbury, cautioned in May that shareholders could be left worse for wear.
The combined firm will be led by Shaftesbury’s chair Jonathan Nicholls as non-executive chairman and Capco’s boss Ian Hawksworth as chief executive.
New boss Ian Hawksworth held back from confirming any job losses, but told City A.M. that the companies will be looking to take the best from each side to work under Shaftesbury Capital.
“We will be looking at the most effective operating structure… Yes, there will be some efficiencies, but we haven’t concluded what they will look like,” he said.
The merger has unlocked around £12m in extra capital, as both companies look to consolidate some of their outgoings, such as moving into a shared office.
As to what the combined group will splash the cash on, Hawksworth said: “There’s plenty of fire power if we wish to deploy it, in our existing buildings or acquisitions.”
Shaftesbury Capital will oversee some of London’s most popular tourist destinations, including Covent Garden, Carnaby, Chinatown and Soho.
But beyond tourists, the core customer base of Shaftesbury Capital’s West End will be London’s domestic market, Hawksworth added.
“They are popular with visitors to London both domestic and international. We’ve seen over last 12-months, since end of Covid-19, activity has increased dramatically in central London,” he said, adding that the area is “not just opportunity for tourists. These are the places where Londoners hang out.”
Both companies had been hit hard during the pandemic, as footfall levels plummeted against pandemic restrictions which kept Londoners and internationals alike homebound.
But London’s bounce back is well on its way, Hawksworth noted, with the West End adopting a healthy glow in recent months.
“London’s recovering strongly isn’t it… Our own businesses have performed well in terms of interest,” he said. “We want everywhere to be fun and interesting and relevant… There’s a lot of authenticity in what we have.”