Crest wins battle as Heron walks away from takeover

Gerald Ronson, chief executive of property company Heron, this week threatened to return after walking away from a proposed £480m takeover bid for housebuilder Crest Nicholson.

Ronson was forced to concede defeat on Wednesday, which was the deadline he was given by the takeover panel to either make an offer or abandon his pursuit of the regeneration specialist.

In a statement to the stock exchange, Heron said “Due to the continued absence of access to information, Heron has no alternative but to confirm that it will not make an offer for Crest Nicholson in the next six months.”

However, in what was clearly a hostile move Heron added that it could participate in a third-party offer for Crest within that time.

Crest Nicholson’s board, led by chief executive John Callcutt, made its objection to Heron’s advances clear when it confirmed the takeover approach in March.

Callcutt declined to comment but a Crest statement in response to Heron’s reiterated that the offer of between 345p and 430p a share, which priced the company at about £480m, undervalued Crest.

It does not signal an end to the row between the two companies. Heron has a 23.4% stake in Crest Nicholson, which makes it its biggest shareholder and is not expected to sell its stake in the short-term.

The amount Ronson has invested does not suggest a short-term stake

Chris Millington, analyst

Analysts this week said it was unlikely that Ronson would sell. Chris Millington, analyst at Bridgewell Securities, said: “We would expect him to sit on the sidelines for the moment, as the amount he has invested does not suggest a short-term stake.”

Ronson has invested about £90m through his 23.4% stake. He would make a profit if Heron sold its stake today, because Crest Nicholson’s share price is above the level that Heron paid for its shares.

However, Millington added that he would expect Crest Nicholson’s share price to fall now that Heron had confirmed that it was not making a bid – possibly to about 350-360p. Shares dropped to 369.7p on Wednesday afternoon as Building went to press.

In six months, according to stock exchange rules, Heron will be eligible to make another bid for the company.

Even if it chooses not to make another bid, the fact that it owns such a large stake means that it could cause significant problems for the board, which was hinted at in Heron’s statement.

Last month Heron voted down proposals that would have given Crest’s board the ability to either issue or buy back 5% of company shares.