Belinda Beresford
Position, position, position is the guiding maxim in property. But Donald Gordon, former head of Liberty Life and now head of Liberty International, is finding that possession is equally important.
Having, metaphorically speaking, built a palatial mansion in South Africa called the Liberty Group, Gordon moved on to the more select address of the London Stock Exchange.
There he started again to build a new empire, creating blue chip property company Liberty International. However, he is now at risk of being evicted from his new passion, for which he forsook control of the South African Liberty Group.
And in a suitably Shakespearean twist for a larger-than-life character, Gordon’s peril comes from the actions of those he left behind.
The Liberty Group (formerly Liberty Life) and its controlling shareholder Standard Bank Investment Corporation (Stanbic) have agreed to a deal selling most of their stakes in Liberty International to the property company’s competitor – British Land.
The two sold enough shares to British Land to fulfil “the intention that British Land ends up with 29,9%”, according to one insider to the deal. Such a stake puts British Land just a shade below the crucial 30% level where stock market regulations would compel it to make an offer to other shareholders.
Gordon was reportedly furious that Liberty and Stanbic had not informed him about the conclusion of the deal before it went through, although insiders to the deal point out that Liberty International knew negotiations were in progress. After building Liberty into an industry giant, Gordon left the helm to successor Roy Andersen to concentrate on Liberty International. An unbundling process simplified the complicated shareholding structures around the Liberty Group, which saw the Gordon family interests sell the controlling interest in Liberty Life to Stanbic last year.
Gordon encourages wariness among associates, and people don’t want to talk on the record about the man. A long-time associate attributes Gordon’s success to “his attention to detail and the fact that he is very determined, completely focused”. He was one of the pioneers in the South African life assurance market, and one of the innovators in bringing linked investment products to local markets.
His new venture, Liberty International, has a good track record, with holdings including some of the prime shopping real estate in the United Kingdom.
At 70 Gordon is building up for what is possibly his last great battle. His protagonist is a man who also qualifies for his pension, the 64-year-old head of British Land, John Ritblat.
Rather than have a rival peering over his shoulder, possibly waiting to strike for a takeover, Gordon is attempting to edge British Land out.
Initially he offered Ritblat a seat on the Liberty International board in exchange for a standstill agreement that would limit the stake British Land could hold. Ritblat rejected that suggestion.
Gordon has now offered cash to the two South African institutions to withdraw from the British Land deal and sell shares to Liberty International itself. The offer and counter offers are subject to various regulatory and shareholder approval.
Stanbic said it would stick with British Land. However, Liberty International can still try to pursuade Stanbic’s shareholders to reject that deal and accept the counter-offer. Stanbic will hold an extraordinary general meeting on July 6 where the competing offers can be laid before shareholders. In terms of its deal with British Land, Stanbic will recommend the original agreement be accepted. Stanbic management say their only interest is who offers the best deal for the banking group’s shareholders, and the personalities involved are immaterial.
On the face of it the deal looks advantageous to the South Africans: Liberty International is offering 575p a share. Stanbic has said that it faces a 15,7p a share fee, adding up to 14,7-million, if it accepts the Liberty International offer, bringing down the amount the company would receive to about 560p a share. This would still be higher than the British Land deal – a cash and share offer which fluctuates according to British Land’s share price.
However, the Liberty International offer has still to be approved by its shareholders, and some observers are sceptical about whether this approval will be forthcoming. Others however, believe that Gordon would not have made an offer on which he was not confident of being able to carry his shareholders.
Effectively, Gordon is asking shareholders to pay a premium for shares, which would entrench him and his management team in control of the company. The question is whether shareholders still think Gordon is worth the extra cash. The events of the next few days are likely to see what kind of value shareholders put on the famously pugnacious, difficult and obsessive tycoon.