Shopping centre landlord Hammerson has dropped plans to acquire rival Intu in a £3.4bn deal, in a move that has been criticised by the latter.

It comes after French counterpart Klépierre announced at the weekend that it no longer intends to make a bid for Hammerson.

The board of Hammerson said that while tie-up with Intu still makes sense, the equity market’s perception of the broader UK retail property market had deteriorated since the start of the year, leading to a “disconnect between the company’s share price and the fundamental value of its business and prospects”. Hammerson admitted there were also concerns about the extended time period needed to complete the transaction and to realise longer-term returns.

For the deal to be terminated the agreement of Intu shareholders is also needed. However, in a statement issued an hour after Hammerson’s, Intu described Hammerson’s rationale as unsatisfactory, stressing it had pursued the transaction in good faith. It will now meet to consider Hammerson’s actions.

David Tyler, chairman of Hammerson, said: “After careful consideration, the Board has concluded it is no longer in the best interests of shareholders to carry out the Intu Acquisition.

“In recent weeks, investors have told us they share our view of the exceptional quality of our portfolio and that they have great confidence in our management team. The Board has complete conviction in Hammerson’s prospects as a standalone business as we pursue our plans for future growth.”

David Atkins, chief executive of Hammerson, added: “Hammerson is an ambitious company with a disciplined approach to the pursuit of compelling investments to strengthen its portfolio. It is clear that the heightened risks to the Intu Acquisition now outweigh the longer-term benefits. We have a clear strategy that has delivered consistent, strong returns on a standalone basis and we look forward to updating the market in the near term on our plans to accelerate the delivery of further value for shareholders.”

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