British Land shares soar on takeover talk
Shares in British Land leapt 8% in early trading today on reports that a group of Indian and Gulf investors is considering a takeover worth more than £10bn.
Property slide: British Land owns the Broadgate Circle in the City
A consortium, said to comprise Indian steel tycoon Lakshmi Mittal and the Abu Dhabi royal family, has approached Credit Suisse for advice on a possible buy-up of Britain's second-largest property company.
Just over half the company's assets are retail premises, including more than £1bn-worth of out-of-town superstores leased to supermarket chains such as Sainsbury and Tesco. The rest are offices, including the Broadgate complex in the heart of the City of London.
The reports, in today's Daily Telegraph, come as a two-year decline in residential and commercial property markets appear to be coming to an end - at least temporarily.
British Land shares, which are up 36% over the past month, gave up some of the early gains but were still 27.4p higher at 520p by 1.30pm. They were also pushed higher yesterday - up from 481p to 493p - when rumours first began to circulate in City dealing rooms that a sovereign wealth fund was considering a bid.
The effect of the bid speculation washed over other property stocks with Derwent London up 49p at 1,174p and Hammerson up 10.2p at 407.5p.
Some analysts remained unconvinced that a deal would be done. John Cahill, analyst at KBC Peel Hunt, told Reuters: 'I'm sure there's some basis to it, but do I think (the deal) would happen? I'd be very surprised. Middle Eastern money tends not to buy whole companies, they tend to cherry-pick the assets, it would be unusual for them.'
In May, the company marked down the value of its properties by £3.2bn to £8.63bn. Larger rival, Land Securities, slashed £4.7bn from the value of its assets in the year to the end of March.
Prime location: British Land's York House at Marble Arch in London
'We are starting to see parts of the market beginning to stabilise,' said chief executive Chris Grigg in May. But rents in second-division shopping centres were still said to be falling.
The market for City office space collapsed in the wake of the financial crisis.
British Land's pre-tax profits for the year to the end of March were slightly down at £268m, although once the 28% writedown on the property portfolio was included it swung to a massive £3.9bn loss.
British Land was founded in 1856, set up with the aim of enabling people to buy freehold property at market prices in order to qualify for a vote in Parliamentary elections.
The company is due to deliver a trading update on Tuesday.
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