* Board votes unanimously to axe break-up
* Analysts see deal as financially unwise for French firm
(Adds more detail, background)
By Andres Gonzalez and Sinead Cruise
MADRID/LONDON, April 7 (Reuters) - Gecina, the French affiliate of Spain's Metrovacesa, has voted to scrap a plan to sever ties with the Spanish company, the Paris-listed investor said on Tuesday.
Confirming an earlier source-based story on Reuters, Gecina said it has voted against a proposed split, which some analysts described as financially unattractive for the company following a sharp drop in its net asset value.
"The (Gecina) board has unanimously approved not to apply the separation agreement," a source close to Gecina told Reuters. It said in a statement the decision will enable Gecina to focus its on development.
Metrovacesa declined to comment on the Gecina vote.
The two companies originally agreed to a split to quell a power struggle between the Rivero/Soler and Sanahuja shareholder factions who disagreed on the management and direction of Metrovacesa following its merger with Gecina.
Under terms of the 2007 break-up deal, Gecina, which has about 12.4 billion euros of assets under management, would regain its independence from Metrovacesa in exchange for a portfolio of Paris office properties, which at the time had a gross asset value of 2.3 billion euros.
Since Metrovacesa fell into the hands of its lenders earlier this year, the Sanahuja family has largely given up day-to-day control of the indebted company.
Since Rivero's arch rival no longer holds the reins at Metrovacesa, his faction has opted not to execute the split, which could leave both firms unnecessarily vulnerable to further repricing of French and Spanish property.
Commercial property prices in Madrid, Barcelona and Paris are set to fall between 25 percent and 40 percent this year, the latest forecasts from broker King Sturge show.
Furthermore, Gecina argues the agreement is no longer valid since it was signed by the Sanahuja family -- who are no longer in control. Metrovacesa has previously said the agreement remains binding.
SWAP
Gecina's stock has also plummeted by almost 65 percent in the past year, meaning under the proposed swap deal Gecina would receive 469 million euros worth of its own shares (based on Friday's closing price) in exchange for assets worth 1.9 billion euros at end-December.
"It is clear to us that the economics of the transaction are not in Gecina's favour given the large decline in Gecina's share prices since the deal was agreed, and we would not be surprised if Gecina were to try to find a way out of it," analysts at JPMorgan said.
Handing over the assets to Metrovacesa would also break Gecina's debt covenants by pushing its loan-to-value ratio beyond a level agreed with creditors, investment bank BNP Paribas pointed out in a research note in December.
A cancellation of the split, and a continued cross-shareholding might not be all bad for Metrovacesa.
The Spanish company, which booked a loss of 738 million euros last year because of asset writedowns, would once again be able to consolidate Gecina in its accounts. The French company also continues to generate juicy dividends, totalling 126 million euros for Metrovacesa last year.
Anxious shareholders have called on the companies to resolve the situation fast.
Gerios Rovers, European chief investment officer at U.S. investment manager Cohen & Steers, a Gecina shareholder, said he hopes the boards will abandon plans to go their separate ways.
"What we basically want to see happening is a cancellation of the separation agreement ... there's no question about it," Rovers said.
"That is the best option for Gecina," Rovers said. (Additional reporting by Ben Harding and Jonathan Gleave; Editing by Andrew Macdonald)