BRITISH shopping mall owner Hammerson said on Monday it is selling its 42 per cent stake in luxury shopping centre operator Value Retail to LVMH-backed private equity firm L Catterton for an enterprise value of 1.5 billion pounds (US$1.94 billion).
Shares in Hammerson rose as much as 10.2 per cent to 32 pence in early trade.
UK-based Value Retail is the developer and operator of luxury shopping destinations across Europe and China including Bicester Village in Britain.
Hammerson said it will receive cash proceeds of 600 million pounds from the sale of its stake and will use the funds to reduce its net debt and invest in assets in its core markets.
"The disposal focuses our portfolio on prime urban real estate with a transformed capital structure and the capacity and capability to advance our strategy in higher yielding opportunities with stronger returns, whilst enhancing returns to shareholders," Hammerson CEO Rita-Rose Gagné said in a statement.
Since Gagné took over in 2020, Hammerson has been selling off its shopping centres to tackle its huge debt pile, which it cut by 23 per cent last year to 1.33 billion pounds by the end of 2023. The company's market capitalisation is currently 1.45 billion pounds, according to LSEG data.
Following the sale of its stake in Value Retail, Hammerson intends to adopt a payout policy for an ordinary dividend of about 80-85 per cent of adjusted earnings and a share buyback worth 140 million pounds.
The company also announced a 1-for-10 share consolidation.
In 2016, Catterton, LVMH and Groupe Arnault, the family holding company of LVMH chief Bernard Arnault, partnered to create L Catterton. (US$1 = 0.7746 pounds)