The layered double hydroxide of Mg with Al decomposes below 600 degrees C with the loss of nearly 48% mass, resulting in the formation of an oxide residue having the rock salt structure and nanoparticulate morphology. However, this product reconstructs back into the parent LDH, owing to its compositional and morphological metastability. The oxide can be kinetically stabilized within an amorphous phosphate network built up through an ex situ reaction with a suitable phosphate source such as (NH4)H2PO4. This oxide transforms into a thermodynamically more stable phase with a spinel structure on soaking in an aqueous medium. The oxide residue has a nanoparticulate morphology as revealed by the Scherrer broadening of the Bragg reflections as well as by electron microscopy. This work shows that the hydroxide reconstruction reaction and spinel formation are competing reactions. Suppression of the former catalyzes spinel formation as the excess free energy of the metastable oxide residue is unlocked to promote the diffusion of Mg2+ ions from octahedral to tetrahedral sites, which is the essential precondition to the formation of a normal spinel. This reaction taking place as it does at ambient temperature and in solution helps in the retention of a nanostructured morphology for the spinel. Another way of stabilizing the oxide is by incorporating the thermally stable borate anion into the LDH. This paves the way for an in situ reaction between the cations of the host LDH and the borate guest. The in situ reaction directly leads to the formation of an oxide with a spinel structure.