Pillar Properties in talks that could lead to £770m takeover

Pillar Property, the retail parks group, is in advanced talks about a takeover that would value it at around £770m. The predator is understood to be British Land.

The deal would allow British Land to expand its already extensive interests in retail property and would represent the first significant move for the new chief executive, Stephen Hester.

Pillar, set up in 1992, specialises in out-of-town shopping parks, usually focused around clothing outlets such as Marks & Spencer.

The company did not name the bidder but in a statement said: "Following the recent movement in Pillar's share price, the board of Pillar confirms that it is in advanced discussions, which may or may not lead to an offer for Pillar. The indicated price is 855p in cash per Pillar share including any final dividend declared by the board for the year ended 31 March 2005."

A takeover of Pillar would make cash multi-millionaires of its founders, chairman Raymond Mould and chief executive Patrick Vaughan. Mr Mould's options and shares in Pillar would be worth some £35m, while Mr Vaughan would pocket around £33m.

Pillar's business model differs from traditional property companies in that it has turned its assets into unit trusts, in which others can invest. That way, it takes the assets off Pillar's own balance sheet but the company has continued to manage the property involved.

Its main interest is a 34 per cent stake in the Hercules trust, a Jersey-based property unit trust that owns £2.5bn worth of retail parks in the UK.

As planning permission is difficult to obtain for out-of-town shopping destinations, following a change in government policy, such assets are highly sought after. Pillar owns a similar stake in a £600m trust that owns property in the Square Mile and a€300m (£207m) European retail park trust.