Wet weather keeps shoppers away from Britain’s high streets

There was a decrease in the number of shoppers visiting high streets, shopping centres and out of town retail parks across the UK in the three months to July, according to a report released today by the British Retail Consortium (BRC).

Unusually wet weather, combined with people being short of money, resulted in footfall for May, June and July declining by 2.3% compared with the same period last year. This is down from a 2.0% fall in the previous quarter.

Footfall was down in all types of locations, but the most dramatic drop was seen on the high street, with a 5.5% decrease compared with out-of-town down 1.2% and shopping centres down 0.4%, the BRC/Springboard Footfall and Vacancies Monitor for May to July 2012 revealed.

Diane Wehrle, research director at Springboard, noted that the gap between the high street and other shopping venues has widened since the same quarter in 2011, partly due to the wet weather. In addition out of town retail locations have shown more resilience because they are more convenient to access by car and provide cheaper car parking.

Apart from the boost from Christmas in December, high street footfall has now been down for 18 months, driven by jobs fears and falling disposable incomes, according to BRC director general Stephen Robertson.

There was little sign of a general Jubilee bounce and retailers will be hoping that the Olympic Games had a more positive impact, Robertson added.

The report also showed a marginal increase in the national town centre vacancy rate in the UK. This figure, which includes high streets and shopping centres, stood at 11.4% in July 2012, up from 11.2% in July 2011. The highest vacancy rates were recorded in Northern Ireland (18.5%), Wales (15.3%) and the North & Yorkshire (13.0%).

UK airport operator BAA to put Stansted Airport on the block

UK’s BAA Airports Limited said today it will proceed with the disposal of London-based Stansted Airport Limited after deciding not to file an appeal to the Supreme Court against a court decision regarding a Competition Commission’s ruling.

As previously unveiled, BAA was ordered to sell Stansted along with two of its other UK airports. At the very end of February 2012, BAA said it had commenced appeal proceedings against a ruling by the Competition Appeal Tribunal that favoured the regulator’s decision from 19 July 2011 according to which the company should sell the London-located airport.

The appeal was rejected last month and BAA was expected to turn to the Supreme Court. Today BAA stressed it still believed the CC decision fails to recognise that the Stansted and Heathrow airports serve different markets, but it would not challenge the ruling any further.

In April 2012, the company announced it had entered into an agreement to shed Edinburgh Airport Limited to GIP for GBP807.2m (USD1.3bn/EUR1bn). As a result of that and following the sale of Stansted, BAA will end up controlling just four airports including Heathrow, Southampton, Aberdeen and Glasgow.

Stansted serves around 17.5m passengers and some 133,500 flights each year. The airport handles more than 205,000 tonnes of cargo annually and had a 2011 adjusted EBITDA of GBP86.6m. Around 10,200 people work at the site, of whom some 1,400 are BAA employees.

Dutch Heineken confirms higher bid for Asia Pacific Breweries

Dutch brewer Heineken NV (AMS:HEIA) said it had agreed a final, higher bid of SGD5.6bn (USD4.5bn/EUR3.6bn) for the direct and indirect stakes in Singapore-based peer Asia Pacific Breweries Ltd (SGX:A46), or APB, held by Fraser & Neave Ltd (SGX:FNN), or F&N.

The statement came to confirm an earlier report by Reuters, which cited knowledgeable sources, that the company was in talks to sweeten its bid in an effort to prevent a Thai rival, Kindest Place Groups Ltd (KPG), from gaining control of the maker of Tiger beer.

KGN, which is owned by Thai billionaire Charoen Sirivadhanabhakdi’s son-in-law, made an unsolicited and conditional bid of SGD55.00 for F&N’s direct 7.3% stake in APB earlier this month. Charoen owns Thai Beverage Pcl (SGX:Y92), which is F&N’s biggest shareholder with some 24%.

Heineken raised its offer to SGD53.00 per share for F&N’s 39.7% stake in APB, up from the previous SGD50.00 apiece, and proposed the same amount of SGD163m for F&N’s interest in the non-APB assets controlled by Asia Pacific Investment Private Ltd, APIPL, their 50/50 joint venture. The target’s owner has committed to irrevocably recommend the offer and hold a general meeting to put it to the vote, Heineken said.

The final offer represents a premium of 54% over the one-month volume weighted average price per APB share and a price/earnings multiple of 35.1 times for the last twelve months ending 30 June 2012, Heineken said. It described it as providing “compelling” value for F&N and APB shareholders.

Upon completion of the deal, Heineken will own an 81.6% stake in APB it and will immediately start a mandatory general offer of SGD2.5bn for the remaining APB shares. It will fund the transaction with available cash of some EUR2bn, a revolving credit facility and a new bridge commitment arranged by Credit Suisse Group AG (NYSE:CS) and Citigroup Inc (NYSE:C). The Dutch brewer asserted that it was committed to reducing its net debt to EBITDA ratio to below 2.5 times within 24 months following the completion of the deal.

The transaction is subject to gaining regulatory clearance, apart from F&N’s shareholder approval, and is expected to close in the fourth quarter of 2012, but no later than 15 December 2012. Credit Suisse and Citigroup serve as financial advisers to Heineken.

Best Buy’s founder Schulze rejects due diligence offer from board

US consumer electronics retailer Best Buy Co Inc (NYSE:BBY) said its board had offered founder and shareholder Richard Schulze to carry out due diligence with the view of making a firm offer to buy the company, but he had refused to accept it.

Schulze, controlling 20.1% in Best Buy, made earlier in August a proposal to take the company private for a price of between USD24.00 (EUR19.50) and USD26.00 a share, asking to be allowed to conduct due diligence.

Now, the Best Buy board said it had mandated its advisors to start talks with Schulze with the aim of establishing an orderly process that would allow the buyer to gain access to certain financial, operational and legal information, enabling him to continue negotiating with his private equity partners and debt financing sources, as he requested.

The board said its proposal would have given Schulze a waiver of Minnesota law in order to facilitate him the ability to work with his private equity partners towards a definitive proposal, due diligence access for him and his partners and a 60-day period to come up with a fully-financed offer. In exchange, the Best Buy board asked the buyer to accept certain terms aimed at protecting the company and its stockholders and limit outside distraction, without elaborating on these conditions. Schulze turned down the proposal.

The company board said Schulze’s letter from 6 August had proposed a highly conditional deal, providing insufficient information for the directors to be able to form a reasonable opinion on his offer. The bidder has failed to disclose its financing and equity partners, the board explained.

In his letter, Schulze said he had talked with top buyout firms interested in taking part in a deal, as well as with former Best Buy senior executives and put together a business plan addressing the problems currently faced by the company.

The buyout would be financed with funds from private equity firms, around USD1bn of equity investment by Schulze and debt financing, which his advisor Credit Suisse Group AG (NYSE:CS) assured it can be arranged, the founder said.
According to Schulze, Best Buy would benefit from being taken private by eliminating the market and execution risk for shareholders associated with a turnaround under an interim CEO.

The offered price per share values Best Buy at over USD8bn, Reuters said.