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Developers Shake on $1.9B Merger Deal

LONDON-Two of the UK's specialty developers, Derwent Valley and London Merchant Securities, are planning to merge to create a euro 3.3-billion (US $4.3-billion) company.

By Anita Howarth | Updated on November 15, 2006

LONDON-Niche London developer Derwent Valley surprised the market with its acceptance of a euro 1.47-billion ($1.9-billion) takeover of rival London Merchant Securities. The deal effectively scuppers merger talks between LMS and Great Portland Estates. GPE subsequently announced it was no longer considering a deal because it had interest only in a transaction that would have been “value-enhancing” for its shareholders.

Robert Rayne, chief executive of LMS, will become chairman of Derwent Valley. John Burns, managing director of Derwent, will become chief executive.The new company, Derwent London, will have a portfolio worth £2.25 billion comprising 5.6 million sf. Some 61% of that is in London’s West End and 23% in the city borders. A joint statement by Derwent and LMS added that the new group would be well positioned to become a REIT next year.

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