Market wrap: Shaftesbury and Capco shares fall amid merger talks

Shares in West End giants Shaftesbury and Capital & Counties lost value today on the news that the two were angling for a merger. A late night announcement on 7 May revealed that the companies are in formal talks to join forces, creating a £3.5bn property portfolio in central London which could, over time, change the face of the West End’s market. Such a merger has been on the cards since Capco bought out Hong Kong tycoon Samuel Tak Lee‘s strategic stake in Shaftesbury for £436m in mid-2020. However, with the pandemic ravaging West End footfall for both landlords, the process has been at a standstill for nearly two years. That was not enough to stop shareholders cashing out today. Capco suffered the worst of the losses, with its stock plunging 6.8% to 154p. Shares in Shaftesbury, meanwhile, fell by a more modest 3%, finishing the day at 560p. The merger by the two FTSE 250 companies could even create a giant big enough to break into the lower reaches of the Blue Chip index, analysts said. Stifel’s John Cahill estimates a market capitalisation just shy of £3bn for the combined company, based on 3.33 Capco shares for every Shaftesbury share (the firm advised investors to “treat this assumption with caution”). The portfolio would be valued at about £4.5bn, he added. The lion’s share would be split almost equally between retail and hospital and leisure. To send feedback, e-mail alex.daniel@eg.co.uk or tweet @alexmdaniel or @EGPropertyNews Photo © Oleg Gamulinskiy/Pixabay