Merger blocked by shareholders, as speculation grows that Bovis parent could itself become takeover target

A proposed 拢2.9bn merger between Lend Lease, the Australian parent of Bovis, and General Property Trust, has been blocked by GPT鈥檚 major shareholders.

Some of the developer鈥檚 large institutional stakeholders, including BT and investment group Colonial First State, have come out in opposition to what would in effect have been a takeover by Lend Lease.

Lend Lease said it did not intend to improve its bid for GPT, which is now subject to a takeover offer from Stockland, another Australian developer.

Greg Clarke, Lend Lease鈥檚 chief executive and managing director, admitted that the failure of the merger was a blow. He said: 鈥淗aving the merger blocked is very disappointing, but we accept that this is the way of corporate democracy and we will get on with business.鈥�

After the deal collapsed, there was fresh speculation in the Australian market this week that a weakened Lend Lease had itself become a takeover target. Were this to happen, it could lead to a break-up of the company.

Rival developer Westfield, which is also a GPT shareholder and voted against the merger with Lend Lease, has been named as a possible buyer of Lend Lease. It is considered unlikely that it would want to hold on to Bovis in the event of such a deal.

However, Clarke has always been adamant that Lend Lease would hold on to Bovis, which is the most profitable part of its business.

In response to the failed GPT deal, a spokesperson for Lend Lease said: 鈥淟end Lease and Bovis Lend Lease鈥檚 activities in the Europe, Middle East and Africa region will not be directly impacted in any way by the outcome of the unit holders鈥� vote in Sydney regarding the proposed merger of GPT.鈥�

Lend Lease鈥檚 construction arm has contributed more than half of total profit in the past financial year, and with more than Aus$1bn (拢420m) in the bank, Lend Lease is cash rich and in no need to sell.

Since Lend Lease bought Bovis from P&O in 1999, many in the Australian market believe that the two companies were not as fully integrated as the parent company had hoped.

Projects they have collaborated on include the flagship Bluewater shopping centre in Greenhithe, Kent, and the Chapelfield retail development in Norwich. Bovis is also in line to work on Lend Lease鈥檚 Golden Square shopping centre in Warrington, Cheshire.

Bovis is unlikely to pursue the management buyout route, because it is run on a regional basis, divided between Asia Pacific, Europe and the Americas.