Candy Ventures, the investment vehicle of property developer Nicholas Candy, is in early talks over a potential cash takeover of Capital & Counties, the London-focused real estate company that owns Earl’s Court and Covent Garden.
In a regulatory filing on Monday, Candy Ventures said it was in “the early stages of considering” an offer to acquire the entire issued and to be issued share capital of Capco. It noted, however, that “There can be no certainty that any offer will be forthcoming, nor as to the terms of any such offer.”
Shares in Capco rose almost 9 per cent in morning trade after the announcement, giving it a market value of roughly £2.3bn.
In response to the disclosure, Capco said it had noted the filing but added that “there has been no approach made to the company by Candy Ventures or any other party”.
It also said it had entered into a short period of exclusivity on Sunday with an entity connected to Delancey for the possible sale of Earl’s Court.
Mr Candy, along with his brother Christian, is best known for developing One Hyde Park, one of London’s best-known luxury housing complexes, which has drawn criticism over the high cost of its flats.
Candy Ventures must either announce a firm intention to make an offer or back away from any deal by November 18.
Capco has been under pressure as it seeks to limit the collapse in value of its project in Earl’s Court, one of the largest development sites in central London.
The value of its investment plummeted from £803m in 2015 to £389m in June this year, according to company reports. It fell 16 per cent from December 2018 to June. The value has been dragged down by a slump in demand for prime property, as well as local opposition to the redevelopment plans.
Shares in Capco have almost halved since their 2015 highs, while its chief investment officer, Gary Yardley, stepped down in June amid the collapse in value at Earl’s Court.
As it sought to contain its woes at Earl’s Court, Capco in July decided to split its estate into two separate entities, with plans to launch Covent Garden independently as a real estate investment trust. It said on Monday that it was “well advanced” in executing the separation of its two central London estates.
Other companies that have shown interest in snapping up Earl’s Court include Canary Wharf Group, people familiar with the matter have said, as well as housebuilder Berkeley Group.
Analysts at Peel Hunt said the Candy Ventures announcement reinforced their view of the value in Capco. “Such an approach is, in our view, as much an endorsement of Covent Garden as it is an opportunistic tilt at Earl’s Court,” they said.