Â鶹ӳ»­

London-based real estate private equity group Patron Capital Partners has broken off talks with Paris-listed property company Société de la Tour Eiffel (STE) about a shares-for-property swap.

The two parties had been in exclusive negotiations since 20 September 2013. Under the proposed deal, Société de la Tour Eiffel was to offer Patron shares totalling 8.4% of its share capital in exchange for a 20,000 m2 office complex on the fringes of Paris. The 20,000 m2 asset, located in the Malakoff district of the French capital, is currently let to corporate voucher distributor Edenred on a lease with eight years to run. The proposed deal would have generated an initial return of 7.2%.

But on 30 October Patron informed STE in writing of its decision to discontinue negotiations. The withdrawal, STE explained in a statement, was motivated 'in particular by the uncertainty surrounding the recent change in shareholding and the stated intentions of Compagnie M.I.29 in its latest declaration to the stock market authorities.'

Compagnie M.I.29 is a company controlled by French businessman Chuc Hoang. Back in April 2013 Compagnie M.I.29 exceeded the 5% and 10% thresholds of the share capital ownership and voting rights in STE. Hoang indicated at the time that he had no intention of taking control of STE or changing its strategy.

The situation, STE said in the statement, has changed since then. 'Contrary to its declarations of intention confirming that it did not wish to gain control of the Société de la Tour Eiffel, MI 29 has initiated summary legal proceedings with a view to obtaining the nomination of a legal mandator charged with calling a shareholders’ general meeting to consider the revocation and replacement of the company’s directors and the cancellation of delegated powers to effect a capital increase by way of an asset contribution.'

'Whilst considering this action to be totally unfounded and unlikely to succeed, Société de la Tour Eiffel considers that the method and unfounded allegations of MI 29 cause grave prejudice and are aimed exclusively at destabilisation in order to facilitate a creeping take-over'.

STE said that Patron had reaffirmed its confidence in STE's management but declined to complete the transaction. STE's board added: 'The company regrets this missed opportunity which would have signalled, a year in advance of projections, a new growth path following a strengthening of its balance sheet and total refinancing of its debt. Other growth opportunities will continue to be considered alongside the continued disposal of non-core assets.'