Liberty victory fuels expectations of hostile approach

Liberty International, the property company, won the latest round in its battle with rival British Land yesterday, gaining overwhelming approval from its shareholders for a share buyback programme.

Liberty International, the property company, won the latest round in its battle with rival British Land yesterday, gaining overwhelming approval from its shareholders for a share buyback programme.

Observers say, however, that the move could prompt British Land, headed by John Ritblat, into a hostile bid for Liberty to try to gain control of its lucrative shopping centre interests.

Liberty shareholders yesterday gave management 97.4 per cent approval to buy a 29.9 per cent stake of the company's shares from South Africa's Standard Bank Investment Corp (Stanbic) and Stanbic's subsidiary Liberty Group .

The two parties agreed last month to sell their stake in Liberty to British Land in a 550p-per-share cash-and-paper deal. Liberty counter bid 575p cash per share and offered an interim dividend of 10.25p.

Stanbic faces paying a penalty of around £15m if it goes back on its original deal with British Land. Its shareholders are to vote on Liberty's counter bid on Thursday.

After yesterday's vote was announced, British Land said it would not improve on its offer for Stanbic's stake. Industry observers believe that Mr Ritblat's group could now launch a hostile bid for Liberty.

Analysts say British Land wants to raise its exposure to Liberty's portfolio, which includes lucrative retail complexes owned by Capital Shopping Centres, in which Liberty has a 75 per cent stake.

British Land shares, which have fallen from about 480p in mid-May, ended up 4.75p to 397.25p. Liberty's shares closed down 13.5p at 502.5p.

Liberty, Britain's fifth biggest property firm, also won approval to buy back up to a further 10 per cent of the shares. The company has already said it wants to buy the stake in CSC it does not already own if it succeeded in buying Stanbic's stake.

Liberty's chairman Don Gordon said after the shareholder meeting: "I never felt unsafe. There was a clear indication that British Land's attempt was unwelcome."

Last week, Mr Ritblat sent Liberty shareholders a letter urging them to reject the share buyback proposal, in which he said it was "inequitable for just two shareholders to receive preferential treatment".

However, some analysts believed the buyback scheme was in the best interests of Liberty's shareholders, and could enhance Liberty's net asset value.

Market speculation has suggested that British Land has considered selling off some non-core property assets to fund a takeover. British Land has also roped in as advisers Deutsche Bank and Morgan Stanley.