Liberty to lose freedom in £68m takeover

Marylebone Warwick Balfour, the property investment group, has emerged as the frontrunner in the race to buy Liberty, the struggling department store chain.

MWB's board is understood to be meeting this week to finalise details of its bid, thought to be worth about £68m. The offer is expected to beat rival proposals from Moorfield and Shaftesbury. Both groups are understood to have abandoned earlier plans to make a full bid for Liberty.

If MWB is successful, the group's chief executive, Richard Balfour-Lynn, plans to convert one of Liberty's four main sites, on London's Regent Street, into serviced offices.

He is also said to be keen to exploit the e-commerce potential of the Liberty brand, although he does not intend to close down the company's stores, and the flagship shop in Great Marlborough Street will remain intact.

A £68m offer would value each Liberty share at £3, a 50 per cent premium on the group's closing price on Friday. It would be welcomed by Bryan Meyerson, the corporate raider who holds a 16.9 per cent stake in Liberty. Mr Meyerson last year forced a boardroom coup that saw Denis Cassidy, the former chairman, replaced by Philip Bowman, who is also chief executive of Allied Domecq, the spirits group.

In order to seal the deal, MWB would also need to convince Elizabeth Stewart-Liberty, the founding family matriarch who owns 20.7 per cent of the group's equity. She has previously warned that an offer of less than £3 a share would be rejected.

Other investments in MWB's portfolio include the Howard Hotel, near the Embankment, which it acquired from the Barclay brothers in March, and a five-star development in Park Lane. It is also the majority owner of the UK's second-biggest serviced offices centre, the MWB Business Exchange.