Shake-up at MEPC may lead to sell-offs

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The Independent Online
MEPC, the property group which recently ended merger discussions with its rival Hammerson, has launched a shake-up of its business which could see parts being sold or floated off later this year.

The move is an attempt by James Tuckey, chief executive, to revitalise the group after pressure from big shareholders dissatisfied with the company's lacklustre performance against rivals like British Land.

The break-up proposals are being seen as a logical extension of the reorganisation of the group into four business divisions instigated by Mr Tuckey last September. That saw the UK operations divided into four "vertically integrated" groups, namely retail, including leisure; small properties; industrial and offices.

The new arrangement would make it easier to float off or sell parts of the business, but it is being stressed that nothing is imminent. One insider said over the weekend: "They have got the option to hive off any of the four if that would add value. What they are not saying is that they are about to do this because all these bid rumours are around."

One possible candidate for separation is the smaller properties operation, which has been criticised for being too fragmented and poorly located, but is currently said to be doing well.

MEPC is also building up other parts of the group, which could leave them in better shape to stand on their own. Earlier this month, for instance, the retail side paid pounds 80m for three factory outlet centres belonging to C&J Clark, the private shoe group.

Other parts where a demerger is on the cards include the US and the strongly performing Australian arm. The group is also ready to entertain trade offers for its businesses.

The plans, on which the board is being advised by investment bank Deutsche Morgan Grenfell, are tentative at this stage. However, it is understood they do not encompass a full-scale, complete break-up of the group into six parts.

Mr Tuckey is aware that large shareholders, which include the Co-operative Insurance Society and PDFM, are unhappy with the performance of their stake in MEPC.

They are thought to have led the pressure to open the talks with Hammerson and so the ending of discussions in January is only likely to have increased their unhappiness.

Signs that MEPC was taking such concerns seriously emerged with plans that the group was undertaking a massive outsourcing exercise to reduce costs.

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