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Activist investor Laxey Partners today dumped its 19% holding in Shaftesbury after a clash with the West End landlord over its £150 million rights issue.
The hedge fund sold its 25.7 million shares for 282p and its 17.2 million nil-paid rights attached to the stake through the fundraising for 107p, raising £91 million.
The stake, much of it held through London-listed Terra Catalyst Fund, was worth £130 million last night when Shaftesbury shares closed at 308¾p.
Shares in Shaftesbury, which owns what it calls “villages” in Carnaby Street, Chinatown and Covent Garden, fell as low as 284p in early trading today but were down 10¾p at 298p tonight. Terra fell ¾p to 46p.
Traders said investors rushed to snap up the shares after they were placed for Laxey by JPMorgan Cazenove this morning.
The decision to sell came just a week after Laxey, a well-known corporate agitator based in Jermyn Street in London, reluctantly voted in favour of the two-for-three rights issue to raise £149.1 million.
Shaftesbury plans to use the money to pick up bargains and develop a new village in Berwick Street in the heart of Soho over the next decade.
It exposed a clash of cultures at the top of both parties with Shaftesbury insisting it was a good long-term investment while Laxey argued for short-term gains. Laxey also needs the money to fund its 124 million bid for Spazio Investment, the AIM-listed Italian property firm.
Analysts said Laxey was concerned Shaftesbury was turning into “a dull beast”, but added Shaftesbury chief executive Jonathan Lane will not be sorry to see it off the share register.
In thin trading elsewhere, the FTSE 100 index rose 31.52 points to 4468.27 but the midcap FTSE 250 was down 28.61 points to 7701.37.
The blue-chip index has been locked in a trading range between 4300 and 4500 since early May having bounced off its March low of 3512. It started the year at 4434.
In New York, the Dow Jones Industrial Average was up 85.40 at 8824.42 tonight, having shed 24 points last night. The rally came after a slight improvement in the jobs market.
Back in London, Royal Bank of Scotland was up 2.3p to 40.2p and Lloyds Banking Group gained 1.3p to 66.3p on growing hopes that the Government is looking at ways to reduce its stakes in the two part-nationalised banks.
Barclays shares were up 7p to 295½p ahead of next week's investor presentation by its highly profitable investment banking arm Barclays Capital and the possible sale of Barclays Global Investors. Alex Potter of Collins Stewart has a 260p price target but said he expects Barclays to “continue its rally” in the short term.
Traders hope that a deal with Blackrock for the sale of BGI is on the verge of being struck although some warned that the longer it takes for the deal to be announced, the more nervous the market will get. Barclays has until Thursday next week to find a buyer for BGI. If it does not, it has agreed to sell the iShares unit to CVC.
Listed hedge fund Man Group was 7p higher at 269p with traders pointing to rumours of possible interest from Goldman Sachs. Icap, up 11p to 4463⁄4p, was also making moves.
Thomas Cook gave back some of its early gains but was still up 2p to 221p on reports that Arcandor, a German retail group that filed for insolvency on Monday, has no immediate plans to hand over its 52.7% stake in the travel company to creditor banks.
Premier Farnell was on the midcap leaderboard, up 7p to 136p, after it admitted first-quarter profits fell from £20.4 million to £13 million but added sales were better in April and May than in March. It distributes electronic components.
Deutsche Bank had its eyes on the recruitment sector, downgrading Hays to sell from hold and raising its price on Michael Page to 131p from 120p. Hays fell 2½p to 89¾p and Page was unchanged at 258¾p.
