Minerva's shares leap on takeover talk

Shares in the UK property firm Minerva surge on market rumours that it will be bought by a Dubai developer.

Shares in Minerva, the UK property firm, have surged on speculation that it will be bought by a Dubai developer, despite the company today blaming Britain's worsening property slump on a 33 per cent fall in its full-year net asset value. Shares in Minerva, responsible for two of the biggest office development projects in London, have increased by 18 per cent since July, when the company said that Limitless, the property development arm of the Dubai World group of companies, had "substantially" completed due diligence on a 160 pence per share bid. Minerva said yesterday that talks were continuing, but there was no certainty of any agreement. Minerva's shares jumped 12.4 per cent yesterday to 79.25 pence, outperforming a flat FTSE 350 Real Estate Index. "Until this point, Limitless continues to explore opportunities in all of its markets, including the UK and other parts of Europe," a Limitless spokesman said yesterday. "There is nothing further to report at this time." Speaking in May in response to a change in Minerva's share price, a Limitless spokesman said: "Limitless notes the recent movement in Minerva's share price and confirms that it is in the very preliminary stages of considering its options in respect of Minerva. No decisions have been made." Fabio Scacciavillani, an economist with the Dubai International Financial Centre (DIFC), said Gulf investors had provided comfort to western exchange markets at a time when the West was in the midst of a "deep credit crunch" and consumer confidence levels in the UK were at an all-time low. "The shares of this company have gone up because people know that the Gulf is the only part of the world with money these days," Mr Scacciavillani said yesterday. "At this point in time, almost any Gulf company that will enter the West would be welcomed because when investors look around them and the biggest investment banks [are] collapsing, there is little hope." An analyst from the investment bank EFG Hermes said now was a good time for Gulf investors to expand their businesses. "It all comes back to the company's strategy to expand, but right now a lot of opportunities are available because of the general economic slowdown," the analyst said. In July, Limitless said in a statement that it waived the right to renegotiate its 160 pence offer unless Minerva chose to pay a full-year dividend. A sharp revaluation of Minerva's investment properties drove its adjusted net asset value per share down to 230.6 pence in the year to June 30, a drop of a third from the previous corresponding year. Citing the valuer CB Richard Ellis, Minerva said the value of its investment portfolio slipped 29.8 per cent to £604.4 million (Dh3.97 billion), but the value of its trading portfolio rose to £282m from £158m last year. Despite the hefty fall, Salmaan Hasan, the chief executive of Minerva, said the company had achieved "a number of important milestones" during the year and "continued to make progress in the execution of strategy". Minerva said it had pre-sold 27 per cent of its Lancaster Gate development, generating more than £100m of future revenues. In addition, it had raised £330m of structured finance to fund the continued development of Lancaster Gate and the acquisitions of Ram Brewery and Leinster House Hotel. "At this time, if world business was depicted as a western movie, the cavalry will be coming from the Gulf to save the world," Mr Scacciavillani said. * With Reuters [e-mail]