Countryside recommends £218m management buyout

The Cherry family this week mounted a £218m management buyout bid for housebuilder Countryside Properties.

The 275p a share all-cash offer has been recommended by Countryside’s independent committee.

Alan Cherry, the company chairman, is leading the bid through Copthorn, a family vehicle created for the buyout and advised by Merrill Lynch and Pricewaterhouse Coopers. His sons Graham, chief executive of Countryside, and Richard, business director, are on the bid team. The family owns 17.1% of the firm’s shares.

Countryside revealed that it had received an approach from a trade buyer pitched at 250p a share on 25 June this year, which was rejected by the board.

One month later the Cherry family informed the board that it was keen to take the company private. The company said it had received three further expressions of interest since then, but that no other bid had been tabled. Countryside has issued three negative trading updates since March.

The Cherry family offer represents a 41% premium to Countryside’s 194.5p share price on 1 September 2004, the last day of trading before the company announced the buyout approach.

However, shares were trading at 284p on Wednesday afternoon, which suggests that the City is expecting a higher bid from a third party.

Speculation is rife about the intentions of Paul Kemsley, the property entrepreneur and Tottenham Hotspur director thought to be behind investment vehicle Rock Pacific. The company has built up a 12.3% stake in Countryside.

The Copthorn bid is backed by financial services provider HBOS, which will retain 50% of the company if the buyout is successful. The Cherry family will hold the remaining half.

Countryside is expected to post a formal offer document to shareholders by the end of this week, after which they will have 21 days to respond. The Cherry family requires the backing of at least 90% of shareholders to be successful.