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UK: PROPERTY GROUP IS LIBERTY'S MYSTERY BIDDER - TAKEOVER.
Sunday Times
13 Feb 2000
THE mystery bidder at Liberty, the upmarket London department store, is Marylebone Warwick Balfour (MWB), a fast-growing property group.
Liberty, valued at �52m and chaired by Philip Bowman, said on Friday it was in "very preliminary talks" that might lead to a takeover, but it did not reveal the identity of the suitor.
In a separate development, Moorfield Estates, where the Barclay brothers have a 6% stake, is also thought to have held talks with Liberty's board.
Liberty's two biggest shareholders, the Liberty family and Brian Myerson, the financier, have become increasingly frustrated by the company's dismal share rating and have been examining ways of boosting performance at the 124-year old fashion and fabrics store.
One option being studied is the creation of a new company in partnership with a property company. Liberty's property assets, which are worth about �44m, could be injected into this vehicle and the cash raised from the sale could be pumped back into the retail operation.
The amount of space occupied by Liberty at its flagship Regent Street store would also be reduced. One possibility is to use the surplus space, subject to planning consent, for serviced offices. Myerson is also known to be keen to exploit Liberty's e-commerce potential. It has a global reputation but aside from its Asian operation its potential is largely untapped.
But a takeover is by no means guaranteed. Liberty has suffered for decades from disputes between the families descended from its founders, the Blackmores and the Stewart-Libertys. Two years ago Myerson successfully led a boardroom cull. He won the support of Elizabeth Stewart-Liberty, the family's matriarch, and ousted Denis Cassidy and other directors. He scrapped plans for a �39m redevelopment and attempted to cut costs. But despite the change in leadership the shares have continued to head south, although in the past month they have recovered 50% on hopes of a takeover.
Richard Balfour-Lynn, MWB chief executive, is being advised by Donaldson, Lufkin & Jenrette. The company is one of Britain's biggest owners of leisure assets and has attracted a strong investor base.
Balfour-Lynn is thought to have held a series of meetings with Liberty executives and is keen to use part of the complex for his expanding servicedoffice operation.
Moorfield is also thought to have had several discussions with board members. Last year, in a joint venture with the Barclay brothers, it pulled off a �400m property-portfolio acquisition from Royal & Sun Alliance and it is keen to do more deals.
Liberty has a strong following among American and Japanese tourists, who are attracted by the store's old-fashioned appearance. However, in recent years the group has struggled to expand its client base.
Last September it reported a pre-tax interim loss of �879,000, having lost �1.79m the previous year. Since then the retail climate has remained tough and Liberty is not alone in feeling the financial pain.
* MWB is one of two groups to have been short-listed by JP Morgan to buy its London property estate. The other company is Mapeley, co-owned by Soros Real Estate Partners and Fortress Investment Corporation.
(c) Times Newspapers Ltd, 2000.
Not Available for Re-dissemination.
By John Waples, Deputy City Editor.
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