Europe’s biggest commercial property company, France’s Unibail-Rodamco, is to buy Westfield, the company behind two big shopping centres in London, in a $25bn (£18.5bn) deal which will make it the largest mall operator in the world.
John Colley, Professor of Practice at Warwick Business School commented: “Consolidation in the retail property industry is accelerating as this acquisition immediately follows the Hammerson £3.2Bn bid for Intu and Brookfield’s $15Bn attempt to buy GGP. Expect more bids in this sector as it attempts to combat falling sales.
“The industry is under severe pressure from internet selling and particularly Amazon. As sales fall so do retail property prices to the point where they become attractive as a discount to asset value.
“The industry is combating Amazon by reducing costs through mergers. Clearly there are significant savings as the new enterprise will only need one Head Office, Board, systems and functional management.
“For this deal no doubt the new Head Office will be in Paris so the Westfield Australian Office is likely to have a limited future. The regional management structure is more likely to survive as there is little geographic crossover between the two companies. Westfield is predominantly UK and US based while Unibail is predominantly based in mainland Europe.”
