Miller set to block Lloyds bid to offload 20% stake in housebuilder

Published on Saturday 6 February 2010 15:44

SCOTTISH housebuilder Miller is poised to thwart a bid by Lloyds Banking Group to sell its stake in the company.

Lloyds inherited a near-20 per cent stake in family run Miller when it took over HBOS early last year.

The bank has been gauging interest in its portfolio of HBOS assets, which includes stakes in companies such as tennis and fitness centres David Lloyd Leisure, department store group House of Fraser, clothier TM Lewin and the Vue cinema chain.

But it is understood the Miller family has pre-emption rights on the near-20 per cent that Lloyds holds in the company through HBOS.

Together with the Miller family's 60 per cent majority control of the group, it seems unlikely that Lloyds could package up the stake and sell it on to private equity or venture capital groups without the agreement of the housebuilder. Among groups said to be interested in Lloyds's property assets are 3i Group, Advent International and Coller Capital, an investor that specialises in second-hand private equity assets.

It is believed Keith Miller, the Miller Group chief executive, and chairman Sir Brian Stewart, former chairman of Edinburgh-based Standard Life and Scottish & Newcastle, are keen that if the Lloyds stake is sold on it will be to a long-term investor. It is thought there are also boardroom concerns that the publicity about the potential sale process could have a destabilising effect on staff.

One housebuilding analyst said yesterday: "Probably the last thing they want is anything even resembling a hedge fund moving in on that stake."

Miller Group was left vulnerable after sinking deeper into the red at the halfway stage last summer, striking a loss of 33.8m against one of 22.2m in the corresponding period of 2008, as revenues fell a fifth to about 400m.

But Miller is seen as having a stronger balance sheet than some of the integrated finance assets that Lloyds is considering offloading as non-core.

The bank has said in the past its review could lead to all, part or none of the equity stakes being sold off. Some analysts believe one possibility is for the bank to offer a management contract for the assets to one of the interested parties. Neither Miller Group nor Lloyds would comment yesterday.