TheCcentral London focused developer is poised to pay a 31% premium to acquire London Merchant Securities it emerged this morning.
The stock-for-stock offer of 10 Derwent Valley shares for 67 LMS shares is now worth 291p, allowing for share price movement since the deal was announced last week. This represents a premium of 68.9p a share to LMS’s adjusted net asset value of 222p, as reported in its interim results this morning.
LMS chairman Robbie Rayne said the recommended merger would create ‘a new force in the central London office market’ and deliver enhanced value for shareholders.
‘The merger would be transformational. Ahead of the introduction of REITs, LMS is merging with a company that has a complementary portfolio and strong track record. The combined business, with its greater scale, has excellent growth prospects.’
The value of the LMS portfolio has increased 11.1% on a like-for-like basis to £1.262bn in the six months to September 30. Following completion of the merger, the new entity; Derwent London will have a portfolio in the region of £2.25bn.
Pre-tax profits rose 55% to £96.7m, compared with £62.6m at the corresponding point last year. The company has let more than 90,000 sq ft (8,633 sq m) of space in the period, including 41,500 sq ft (3,855 sq m) of space to Thomson Financial at Monmouth House near Islington, north London.