GPT checks out Lend Lease merger stumbling block

General Property Trust (GPT), the Australian real estate giant considering a £2.6bn takeover bid from Lend Lease, is running its rule over Bovis Lend Lease.

In a letter to shareholders, GPT's senior management state that as part of the evaluation process of Lend Lease's bid: "We have sought information relating to Bovis Lend Lease and Lend Lease's offshore operations, which are less familiar to GPT's investors and differ from GPT's traditional long-term, diversified property investment activities. These construction and offshore activities offer higher growth potential, but also incresaed risk.

"In assessing this information we are conscious of the importance to many investors of the security of GPT's income and investments and the need to explain the material impacts of the proposal on investors."

The worst case scenario for Bovis is that GPT plays hardball and tells Lend Lease to sell its construction arm if it wants the takeover to go ahead. When speculation arose last month, a Bovis spokesman dismissed it as "completely unfounded", adding that "Bovis is an integral part of Lend Lease's future strategy".

In defence of Bovis, Lend Lease chief executive Greg Clarke is reported as saying that although the construction arm brings risks, it also offers higher growth. He added that some GPT investors have been swayed by his group's presentations. However, he conceded: "Some people... have legitimate issues about Bovis."

GPT's management will make a recommendation on Lend Lease's bid before the end of the month.