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LONDON-Niche London developer Derwent Valley surprised the market with its acceptance of a euro 1.47-billion ($1.9-billion) takeover of rival London Merchant Securities. The deal effectively scuppers merger talks between LMS and Great Portland Estates. GPE subsequently announced it was no longer considering a deal because it had interest only in a transaction that would have been “value-enhancing” for its shareholders.

Robert Rayne, chief executive of LMS, will become chairman of Derwent Valley. John Burns, managing director of Derwent, will become chief executive.The new company, Derwent London, will have a portfolio worth £2.25 billion comprising 5.6 million sf. Some 61% of that is in London’s West End and 23% in the city borders. A joint statement by Derwent and LMS added that the new group would be well positioned to become a REIT next year.

“The combined business, with its enlarged scale and focus on central London,” says Rayne, has excellent growth prospects, and I am confident our shareholders will maximize value through this merger.”

“We are uniquely placed both to capitalize on the substantial opportunities within the existing portfolios and to undertake larger acquisitions and development projects than before,” Burns adds.

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