London & Stamford close to merger deal

London & Stamford, the property group controlled by the industry veterans Raymond Mould and Patrick Vaughan, is closing in on a tie-up with retail property landlord Metric Property Investments.

The two companies confirmed on Tuesday that they were in “advanced discussions” over a possible merger. Such deals have been a rarity in the UK commercial property sector this year.

Since the financial crisis, London & Stamford has built up a reputation as one of the canniest operators in the UK property market. The group last month sold its stake in the £1.5bn Meadowhall shopping centre in Sheffield to Norges, the sovereign wealth arm of the Norwegian government.

Metric owns and operates a portfolio of out-of-town retail parks, and has more than 1m sq ft of assets under management.

Under the proposals being discussed, London & Stamford would retain three-quarters of the enlarged group with Metric shareholders taking the remaining 25 per cent. The combined group would have a market value of £843m based on London & Stamford’s closing share price on Monday of 117p.

Mr Vaughan, who is London & Stamford’s chief executive, would become executive chairman of the combined group, while Andrew Jones, his opposite number at Metric, would become the merged company’s chief executive. Mr Mould, London & Stamford’s chairman, will retire from his role.

Mr Mould said he was delighted to have the opportunity to “hand over the keys of an excellent real estate portfolio to an experienced and well-trusted team, chaired by Patrick Vaughan, who has been my business partner and friend for over 40 years, and [I] have no doubt that they will build upon the considerable success that has been achieved to date.”

News of the deal sent shares in Metric up almost 8.9 per cent to 101.25p. London & Stamford, meanwhile, slipped almost 2.5 per cent to 114.1p in late trading.

Analysts at Espírito Santo Real Estate said they thought it unlikely a counterbid would emerge for Metric.

“This transaction resolves some of the strategic issues facing both businesses – a lack of scale in Metric’s case and questions over management succession planning and reinvestment strategy at London & Stamford,” they added.