Shareholders in Rugby Estates Investment Trust would be “barking mad” to accept a 41p-a-share takeover offer, its chairman said yesterday. The bid has been tabled by Laxey Partners, the activist investor, through Terra Investments, its vehicle.

Philip Kendall, non-executive chairman of the trust, which is advised by Rugby Asset Management, urged shareholders to reject the £24 million bid before the deadline on November 24, because rises in commercial property values over recent months made the offer look “ridiculous”.

Rugby, a real estate investment trust whose biggest assets are Stanford House on Long Acre in Covent Garden; Briggate, a shopping street in Leeds; and two industrial units in the South East, said that the value of its portfolio increased by 12.6 per cent between June and October to £63.5 million, bringing the net asset value per share to 76p.

Mr Kendall said: “We are at the bottom of the commercial property market, so Laxey’s bid is perfectly timed but it is a ridiculous offer given the outlook and our shareholders would be barking mad to accept.”

Colin Kingsnorth, chairman of Laxey Partners, told The Times that the activist fund had already achieved its aim of “making something happen” at Rugby’s trust.

“This was an opportunistic purchase on our part. We bought the shares because the company wasn’t doing anything; it wasn’t paying dividends and the stock was cheap. We are not at loggerheads with them or anything but something’s happening now. They have effectively put it in play now, haven’t they? I wouldn’t be surprised if someone else came in with a competing offer. This is all good.”

Laxey made the offer after building its stake to 36 per cent. The trust’s other major shareholders include Merseyside Pension Fund, Invesco Perpetual, F&C Asset Management and Pearl Group.

It said the offer “represents a chance for investors to exit their investment in a company which was set up as an income-paying entity but has never paid a dividend,” adding that the offer represents a premium of 35 per cent over the average closing price over the 12 months to October 12, at 30.37p.

Laxey said it intends to conduct a strategic review of Rugby and said it would work with the board and shareholders to maximise returns and dividends and reduce costs.

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