Row over roles halts Burford MEPC merger

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The Independent Online
Merger talks between Burford and MEPC were halted yesterday after the two property companies failed to agree on roles for their senior directors. The failure of the negotiations is an embarrassment for MEPC, which has come under pressure from its large shareholders to improve its performance or link with a stronger partner.

Any deal between the two companies would have created a property investment and development business with assets worth around pounds 4bn. It would have been the most significant tie-up in a sector which analysts believe needs consolidation.

It is understood Burford, one of the sector's fastest growing companies, approached MEPC early in the summer, but the larger company only showed an interest after Burford's shares fell back from a high this year of 159p to a recent low of 111p.

Talks are thought to have foundered because Burford was only interested in an effective reverse takeover that would have seen its chairman Nigel Wray and chief executive Nick Leslau take top jobs in the enlarged group. This was unacceptable to MEPC, which is headed by James Tuckey, its chief executive, and Lord Blakenham, chairman. After it was announced the talks had come to nothing, Burford's shares fell 4p to 117p. MEPC closed 1.5p lower at 467.5p.

MEPC has come under pressure to rationalise its underperforming portfolio and withdraw from overseas operations since over-extending itself during the late 1980s property boom. Its net asset value has fallen from 473p at the end of 1994 to 450p at the end of last year and its dividend has been flat since the recession.

Recently MEPC rebuffed a takeover approach by Hammerson. It has also been linked with other potential predators, including British Land.

Stung by Hammerson's hostile approach, MEPC has attempted to move on to the front foot itself, appointing a new corporate development director, Robert Ware, to seek out deals. With pounds 100m of cash, it is thought to be looking for acquisitions of up to pounds 500m.

Burford, with a market capitalisation of just over pounds 500m, has been an impressive investment over the past four years, although problems with Trocadero have put its shares into reverse in recent months.

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