West End landlords Shaftesbury and Capco in talks over £3.5b merger

West End landlords Shaftesbury and Capco have confirmed they are in advanced talks over a £3.5b merger that would combine the ownership of popular tourist destinations across Soho, Covent Garden, Carnaby Street and Chinatown.

If successful, the joint venture between Capital & Counties Properties (Capco) and Shaftesbury PLC (Shaftesbury) would lead to a combined portfolio of 2.9 million sq ft of lettable space, including 1.8 million sq ft occupied by retail and hospitality venues alongside 1.1 million sq ft of office and residential accommodation.

Capco would manage retail and hospitality businesses in Covent Garden, while Shaftesbury would oversee the equivalent for Soho, Chinatown and Carnaby.

The anticipated all-share merger would result in Capco holding 47% of the combined company, with Shaftesbury controlling the remaining 53%.

It comes after Capco bought a 25% stake in its soon-to-be partner company two years ago, which indicated expansive moves down the line.

The joint firm will be led by Jonathan Nicholls as chairman and Ian Hawksworth as CEO, replacing former CEO of Shaftesbury Brian Bickell, Shaftesbury executive directors Simon Quayle and Tom Welton, Capco chairman Henry Staunton and non-executive director of Capco Jonathan Lane.

Norges Bank, a significant shareholder in both Capco and Shaftesbury, has expressed its support of the possible merger.

Capco, which first gained Covent Garden in 2006, is receiving financial advice from Rothschild & Co, while Shaftesbury, which was founded in 1985, is being guided by Evercore and Blackdown Partners.