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Hammerson overhaul plan fails to quell investor worries over strategy

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Hammerson overhaul plan fails to quell investor worries over strategy

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By Ben Martin

LONDON (Reuters) - Hammerson's plan to offload property assets and buy back shares has failed to assuage investor unease over the British shopping centre owner's strategy following its decision to spurn a 5 billion-pound ($6.6 billion) takeover by rival Klepierre earlier this year.

The property group on Tuesday said it would sell 1.1 billion pounds of assets, including its 13 out-of-town retail parks, by the end of 2019, buy back up to 300 million pounds of shares, and save at least 7 million pounds of costs a year.

But two large shareholders in Hammerson told Reuters on Friday that they did not believe the overhaul proposed by the owner of Birmingham's Bullring shopping centre would be enough to lift its share price close to 635 pence, which was the level of French firm Klepierre's final unsuccessful cash-and-paper bid for the London-listed group.

Hammerson stock closed at 509.8 pence on Friday and is down 3.1 percent since the company unveiled its new strategy.

"On its own, no I don't think what they've announced is enough to meaningfully close the gap," said a top 20 Hammerson shareholder, adding that the company's plan was "in the right direction" but "could have been a bit bolder" and included more disposals.

A Hammerson spokesman declined to comment.

The investor also said that he had spoken to U.S. activist hedge fund Elliott, which has a near 5.3 percent stake in Hammerson, since the property group disclosed its revised strategy.

According to the shareholder, Elliott had indicated to him that it too would have preferred Hammerson to have been more ambitious with its overhaul plan. A spokeswoman for Elliott declined to comment.

SHAREHOLDER PRESSURE

Hammerson, led by Chief Executive David Atkins, has had a turbulent year.

Shareholder pressure has been growing ever since last December, when Hammerson agreed a 3.4 billion-pound deal to buy rival shopping centre group Intu Properties, which rattled its investors and sent its shares tumbling.

Shareholders were concerned the deal to buy the owner of Manchester's Trafford Centre would ramp up Hammerson's exposure to Britain's troubled retail sector, which has been hit in recent months by the collapse of a series of shop and restaurant chains.

As investor worries mounted, Klepierre sought to gate-crash the Intu deal with a 615 pence-a-share bid for Hammerson in March, which was rejected.

The French group abandoned its takeover attempt in April after Hammerson spurned its second, 635 pence proposal.

Hammerson then bowed to shareholder pressure and dropped the Intu deal the following week, when it also launched a strategic review.

"I don't think there were any big surprises in there," a top 10 shareholder said of Hammerson's new plan, adding that the strategy was "unlikely" to push Hammerson's shares back towards the level of Klepierre's second bid.

Hammerson's 10.6 billion-pound property portfolio encompasses Bristol's Cabot Circus and London's Brent Cross shopping centres, as well as stakes in premium outlets including Bicester Village in Oxfordshire.

By offloading all of its UK retail parks, Hammerson will tilt more towards Europe, where it already owns assets including stakes in premium outlets such as Milan's Fidenza Village and Barcelona's La Roca Village.

Britain's takeover rules mean that Klepierre is in the middle of a six-month ban on making a fresh unsolicited approach to Hammerson that started when it withdrew its interest in April.

($1 = 0.7629 pounds)

(Reporting by Ben Martin. Editing by Jane Merriman)

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