London & Stamford and Metric Property Merge to Create Larger REIT

Two UK Real Estate Investment Trusts to Merge in All-Share Transaction Valued at £209m

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London & Stamford and Metric Property Merge to Create Larger REIT

UK property investor London & Stamford Property Plc (LON:LSP) has agreed to buy rival Metric Property Investments Plc (LON:METP) in an all-share transaction combining the two real estate investment trusts (REITs), Bloomberg News reported on 9 November 2012.

London & Stamford Takeover Bid

The merging companies said in a joint announcement today that London & Stamford is offering 0.94 a share. That gives the deal a value of about £209 million. The takeover bid, which came three days after the London-based REITs said they were in advanced discussions to merge, means that London & Stamford shareholders would own 75 per cent of the enlarged company while Metric shareholders would own the remainder. According to the statement, Metric shareholders would also receive more than £100 million in capital after the completion of the merger, which is currently subject to their approval.

When the merger discussions were first revealed on 6 November 2012, Reuters reported that once an agreement is reached, London & Stamford's chief executive, Patrick Vaughan, would become executive chairman of the combined group while Metric's chief executive, Andrew Jones would become the merged company's chief executive. Meanwhile, the current London & Stamford's chairman, Raymond Mould, will retire from his position, but will be available as a consultant to the enlarged group for a period.

Merger to Create Larger REIT -- LondonMetric Property

London & Stamford owns and develops offices and luxury homes in London as well as warehouses across Britain. Metric, on the other hand, focuses on supermarkets and retail parks in Britain. The company that the two REITs will form through their potential merger will be called LondonMetric Property Plc and will focus on commercial and residential property in London, suburban retail investment and development and opportunistic purchases, the two firms said, adding that the enlarged group will remain listed on the London stock exchange.

Metric's chief executive Andrew Jones said: "The proposed merger will create a larger real estate investment trust with scale, diversity and liquidity and brings together deep real estate knowledge, financial resources and management skills."

Following today’s announcement of a potential merger, Metric’s shares in early London trading were up 1.75 per cent to 102 pence, while London & Stamford’s stock remained unchanged at 110.3 pence, but outperformed the broader index of UK property stocks which was down 0.43 per cent.

London & Stamford Underlying Profits Up

Separately from its takeover bid, London & Stamford Property posted underlying profits of £14.6 million for the six months to the end of September -- up from £13 million a year ago and £11.2 million in the previous six months. Half-year loss per share narrowed to 0.9 pence, from 1.0 pence. Net income, however, fell to £20.5 million from £21.5 million a year before, but the company’s board maintained the interim dividend at 3.5 pence per share.

London & Stamford’s chairman Mr Mould said: "We have experienced a very busy six months during which we have realised an exceptional return alongside our partners”. He also remained optimistic in terms of the company’s future prospects: "Looking forward, we remain convinced that deal flow is increasing and that the quality of opportunities is high.”

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