London & Stamford to merge with Metric

Two of the biggest property flotations of the past half decade have drawn up an audacious plan to merge into a new £812m entity. London & Stamford (LSP), a vulture fund launched in late 2007 by veteran property entrepreneurs Raymond Mould and Patrick Vaughan, is to combine forces with Metric Property (METP), a retail park specialist founded in early 2010 by Andrew Jones.

Mr Jones was the protégé of Mr Mould and Mr Vaughan when they headed Pillar Properties (PLL), once Britain's largest retail park operator. Having sold Pillar to British Land (BLND) in 2005 for £811m, they launched London & Stamford - the third property company of their careers - to have a final shot at timing the market. Meanwhile, Mr Jones became head of retail at British Land, but left with a number of colleagues after the property crash to set up Metric. Now the Pillar team is to be reunited, with Mr Vaughan as executive chairman of the merged company and Mr Jones as chief executive. Mr Mould plans to retire.

The most obvious beneficiary of the deal is Metric, which at a stroke would gain much greater liquidity. With scale at a premium in the current market environment, its share price jumped 11 per cent to a 12-month high on the news. London & Stamford, which is more than three times larger, gains a succession plan. Mr Mould and Mr Vaughan - on whose reputation the company hangs - are already well past retirement age.

The combined portfolio will look slightly odd, with a mixture of London flats, suburban offices and logistics warehouses alongside Metric's retail parks. London & Stamford has just sold its only retail asset - a 50 per cent stake in the Meadowhall shopping centre near Sheffield. Moreover, the two companies have different approaches to making money, with London & Stamford focused on distressed deals and Metric on asset management.

Yet the consideration of scale is likely enough to win over shareholders. "The market is screaming out for large companies," points out Marcus Phayre-Mudge of TR Property, an investment trust that owns a stake in both companies. The promise of a "significant return of capital" to shareholders following the merger is an added sweetener.

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