London & Stamford in Metric takeover talks

London & Stamford Plc (LSP), the commercial real estate investment firm, is in discussions to purchase rival firm Metric Property Investments Plc (METP) in an all-share deal.

The move would combine two commercial property orientated investment firms to form a single real estate investment trust (REIT).

In a joint statement released this morning, representatives announced London & Stamford would trade 0.94 of a new share for each Metric share. Metric’s shares have begun trading up 17% - to 109 pence - on yesterday’s closing price according to Bloomberg News calculations.

The statement claimed: “A significant return of capital to both sets of shareholders following the completion of the merger is planned.”

Metric’s market value rose to £206m following improved trading this morning, whilst London & Stamford’s shares rose 2% to 119 pence denoting a total value of £651m.

London & Stamford’s co-founder Patrick Vaughan would become chairman of the new merger, whilst partner Raymond Mould intends to take partial retirement alongside an advisory position.

Founded in 2007, London & Stamford’s highest profile investment came with the purchase and sale of a 50% stake in Sheffield’s satellite shopping centre Meadowhall, which delivered annual returns of approximately 32%, according to broker Peel Hunt LLP.

Metric, the brainchild of three former British Land Co. executives, raised £175m following early public share offering in March 2010 to acquire capital for the purchase of large shopping and retail outlets.

The company’s chief executive officer, Andrew Jones, is set to hold the same position following the merger, according to this morning’s statement.

This morning’s announcement does not constitute a concrete offer and terms may vary in future, both companies stated.