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Lee Sues Shaftesbury Saying Capital Raise Was Bid Defense

Lee Sues Shaftesbury Saying Capital Raise Was Bid Defense

(Bloomberg) -- The landlord that controls some of London’s most treasured tourist districts is being sued by its biggest shareholder.

Samuel Tak Lee has served legal proceedings against Shaftesbury Plc, the property company that owns most of Chinatown and the shopping districts around Carnaby Street in London, according to separate statements from the landlord and Lee on Tuesday. The dispute is over a share placing in December 2017 Lee says was designed to dilute his stake and make a takeover harder.

The proceedings escalate a long-running dispute over the growth of the company. Shaftesbury has increased in size through regular share sales in recent years as tourists flocked to the West End’s bars and eateries even as the rest of the U.K.’s retail was buffeted by Brexit uncertainty and the rise of eCommerce.

Lee is seeking about 10.4 million pounds ($13.2 million) in damages for alleged losses, while Shaftesbury’s board says the claims have no merit and intends to defend itself against the allegations, the company said in the statement.

The company has spent decades assembling a portfolio of hundreds of small properties clustered in some of London’s busiest tourist streets. Shaftesbury’s formula has proven attractive to some of the world’s biggest real estate investors such as Norway’s sovereign fund, which is its second-biggest shareholder after it built a 25% stake in the business following Lee’s failed takeover attempt in 2015.

“The proceedings raise the same allegations and complaints that have been the subject of extended correspondence received from Mr. Lee’s lawyers, and public statements from Mr.Lee himself, over the last 18 months,” Shaftesbury said in a statement. “They seek to challenge both the rationale for the placing and the way in which the shares were allocated in the placing.”

In a statement responding to Shaftesbury’s announcement, a spokesman for Lee said the 2017 capital raising was designed to dilute Lee’s stake in the company and increase the cost of a potential takeover bid by him.

“Company directors must not be allowed to behave like company owners,” a representative for Lee said in an emailed statement. “Directors must always act in the best interests of all shareholders, yet by undertaking an unnecessary capital raising for an improper purpose, this is what Shaftesbury’s board failed to do.”

To contact the reporter on this story: Jack Sidders in London at jsidders@bloomberg.net

To contact the editors responsible for this story: Shelley Robinson at ssmith118@bloomberg.net, Ross Larsen

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