22 January 2005 – Estates Gazette

Multiplex had recognised Chelsfield’s potential when Elliott Bernerd sought, early last year, to take private the company, he had founded in 1986. When Bernerd turned for backing mainly to billionaire brothers David and Simon Reuben and offered shareholders £404m, Multiplex wanted in. The Australian company paid £30m for a 7.4% stake in the bidding vehicle, Duelguide, eager to protect existing building contracts and to win the construction mandate for Stratford City.

As the year went on, however, Bernerd and the Reubens fell out over their plans for Chelsfield and Multiplex made a £485m bid to buy the whole company, later increased to £515 m. That provoked a £585m counterbid from Multiplexs great Australian rival, Westfield.

Westfield had the firepower to beat Multiplex in any auction, but in an unusual twist, the two collaborated on the £585m bid, with Westfield providing half the cash and a joint venture between Multiplex and the Reubens (already Chelsfield’s biggest shareholder with 34%) sharing the other half equally.

The deal was completed last month, and already, in a move that effectively liquidates the company, Chelsfield’s assets are being split between Westfield and the joint venture. Westfield will take ownership of Merry Hill, the major West Midlands shopping mall, plus retail centres in Bradford and Sprucefield. It will also keep a 25% stake in White City, the huge west London site where a 1.3m sq ft scheme of 230 shops is scheduled for completion in 2008.

Multiplex and the Reubens, meanwhile, will have a 25% stake in this scheme, which the company’s construction company is building, and also have options on the other half share, held by CGI, the German real estate investor.

The two Australian companies will be partners too on Stratford City, the massive east London development at the Channel Tunnel rail terminal. Once complete, the scheme could provide more than l0m sq ft of space, including a 1.9m sq ft regional shopping centre and hotels, housing and offices. Here the Multiplex Reubens venture will have a 50% share, while Westfield has 25% with London & Continental Railways and Stanhope holding the other quarter. Multiplex hopes to win the building contract here too.

The Multiplex Reubensventure will hold half of the 80 acre Paddington Basin site, where Marks & Spencer already occupies the first 466,000 sq ft office building, and the jv is involved in negotiations over the Paddington Health Campus (see News). The jv also has 50% stakes in shopping centres at Aberdeen, and in Rushmere in Northern Ireland. The joint venture has Outright ownership of Chelsfield’s shopping centres in Newcastle upon Tyne and Kirkcaldy, though that effectively means 50% ownership for Multiplex and the same for the Reubens brothers’ vehicle, Aldersgate.

And in a further complication, this jv will have a 25% stake in the Sapphire Retail Fund, which owns shopping centres in High Wycombe’s 178,000 sq ft Octagon Centre (which has scope for redevelopment), Harlow’s 603,000 sq ft Harvey Centre, Cardiff’s 150,000 sq ft Queen’s Arcade and the 458,000 sq ft Charter Walker centre in Burnley. However, Multiplex already holds a 25% stake in Sapphire in its own right, so its combined holding is equivalent to 37.5 %. Adding to the complexity of the ownerships, Multiplex also previously held a 33% stake in Sapphire’s manager and now has a half share in the other 67%.