Outlook: City struggles to rid British Land of the John Ritblat factor

John Ritblat, chairman of British Land, is not only one of the great dinosaurs of the UK property sector, he is also one of its great survivors. During his 32 years at the helm of British Land, he's survived two property crashes and more calls for his head on a platter than you could shake a stick at. Right now, however, he seems to be facing his biggest challenge ever. A number of resolutions have been tabled for the forthcoming annual general meeting which if successful would require British Land to launch a buyback of 10 per cent of its shares and in effect undermine Mr Ritblat's continued role as chairman and chief executive by requiring him to put management of the company's £9.3bn property portfolio out to tender.

The resolutions come from a relatively unknown active value investor, Laxey Partners, but are attracting support from a quite wide array of institutional shareholders. Ironically, the challenge comes at a time of renewed strength in the British Land share price. In common with the rest of the sector, the shares have been storming away all year. Commercial property is enjoying some of the same attributes as the housing market. Exceptionally low interest rates and general disillusionment with the stock market is driving institutional investors into property as never before. According to Mr Ritblat, investment demand for property is at its highest level ever, despite some early indications of weakness in rental rates.

It seems like a curious time to be demanding a shake-up, but then the City has always had a bit of a problem with Mr Ritblat. British Land has some heavyweight non-executive directors on its board, including Derek Higgs, the City grandee chosen by the Government to conduct a review of the role of non-executives in corporate governance, and Lord Burns, a former Permanent Secretary at the Treasury. Despite this, the company continues to be run in the manner of a personal fiefdom. One of Mr Ritblat's sons, Nick, sits on the board. If Mr Ritblat gets his way, Ritblat junior will eventually inherit the kingdom. And if not Nick, then perhaps James, Mr Ritblat's other son, who runs separate property interests backed in a personal capacity by Ritblat senior.

The City hates dynasties in big publicly quoted companies, but whether there is yet enough rope to hang Mr Ritblat with is open to question. Since Laxey declared its hand, the traditional Ritblat discount in the share price has all but disappeared. The discount to net asset value has narrowed to a sector average. None the less, Mr Ritblat plainly has no intention of going voluntarily, nor does he even seem willing to contemplate splitting the roles of chairman and chief executive. As for a share buyback, that's not on Mr Ritblat's agenda either. He'd prefer to invest any spare cash himself.

There's one obvious solution. It has long been hard to see the point of publicly quoted property companies. Many of them are little more than an excuse for the maintenance of lavish lifestyles and expensive head offices in prestigious central London locations. That may be a touch unfair in Mr Ritblat's case, but if the City really does want him out and wants his property too, then institutions should bid for it.

Boots/Sainsbury's

Boots the Chemists has started offering Botox injections at £200 a throw, but the fortunes of this high street giant are looking anything but unwrinkled. Today we get a chance to look behind the counter with full-years results which ought to give an update on the success or otherwise of all the various things Boots has been playing with in an attempt to counter the stagnation of the core dispensing chemist business. These include the move into areas like dentistry, aromatherapy and, of course, those injections.

There are other questions too. For one, is everything alright between the Boots chairman, John McGrath, and his chief executive, Steve Russell? Mr Russell has aligned himself with the move into health services and would undoubtedly struggle to survive if they turned out to be a disaster. Mr McGrath developed a reputation for taking tough decisions at Diageo, but there are whispers that he has either lost some of his dynamism at Boots, or is merely giving Mr Russell enough rope to hang himself with. In any case, the word is that things have all got very political up at Boots' huge HQ in Nottingham.

All of this makes Boots look vulnerable, but where could a bid come from? Sainsbury's is one possibility. Boots is already running a trial scheme with the supermarket group in health and beauty products and services. That trial has recently been extended from six stores to nine. Sir Peter Davis has seemed keen on a full merger of these two middle-class brands ever since he picked up the Sainsbury's baton, but Mr Russell has given him short shrift.

Would it be possible for Sir Peter to launch a bid? It would have to be an all-share deal, justified with significant cost savings and a move to plug Boots products into the whole Sainsbury's chain. Sir Peter was a Boots non-executive for eight years, so he must know its strengths and weaknesses intimately. The whole idea may be a load of Botox, of course. But Mr Russell needs to be looking over his shoulder in more ways than one.

Royal Mail monopoly

The 12-month delay in dismantling the Royal Mail's monopoly, announced by the postal regulator yesterday, has bought Allan Leighton a little time, but it is not the triumph for the former Asda boss that some are suggesting. Considering all the blood curdling noises the Consignia chairman has made about the damage that competition will do to the business, a one-year stay of execution is small consolation.

Graham Corbett, the chairman of Postcomm has largely resisted the public relations barrage mounted by an unholy alliance of Consignia and its unions. He has also withstood some pretty blatant arm twisting from the Trade and Industry Secretary Patricia Hewitt to go easy on the postmen.

In the scheme of things, a12-month delay is inconsequential, which is why the postal users lobby was in relaxed mood yesterday. Compared with the long periods of protection from competition that were enjoyed by other former monopolies such as gas, telecoms and electricity, the postal market is being opened up at break-neck speed. It took the Conservatives 10 years to begin chipping away at British Gas's monopoly following its privatisation, and even now it retains 70 per cent of its market.

Consignia wanted the regulator to follow the European route to liberalisation, which is to lower the monopoly weight limit in stages, knowing this would play into the hands of the incumbent operator. Instead, Postcomm has chosen to abolish the monopoly altogether and then license rival operators to enter the market in stages. Initially, this will be of use only to bulk mail and junk mail senders, but by 2007 everyone will have a choice of who delivers their post and how often. If Consignia still had its monopoly, it would be one delivery a day sometime before mid-afternoon, like it or lump it.

Mr Leighton has a mountain to climb at Consignia and only three years to get to the top according to the timetable for his recovery plan. The regulator has cut him some slack but not very much.

jeremy.warner@independent.co.uk