McCarthy & Stone investors anticipate bidding war

Investors in retirement home specialist McCarthy & Stone are gearing up for a bidding war, with three consortiums circling the sale of the company.

Mars Bidco, a private equity joint venture between Permira and Barclays, has made a formal bid of £1bn or £10 a share. This has been recommended by the McCarthy & Stone board, led by chairman Keith Lovelock.

However, a rival consortium Broomco – backed by the Reuben brothers, retail entrepreneur Tom Hunter and the Bank of Scotland – has made an indicative offer of £10.30 a share.

A third consortium including property tycoon Vincent Tchenguiz has also expressed an interest, but no bid has been forthcoming as yet.

A takeover of McCarthy & Stone would be the biggest in the industry so far this year and the biggest ever in the housebuilding sector.

Mars Bidco has made a deal with McCarthy & Stone that if the firm accepts a rival higher offer it will pay £10m to the consortium in compensation.

Lovelock this week told Building: “We are committed to the Mars Bidco proposal of £10 a share and that is what we are working on. It is a good price and a very good value for the shareholder, and there is absolute certainty in the proposal, no strings attached – it’s ready to go.”

Lovelock said that after the company had received the three approaches, it had given all parties a deadline of last Friday to submit a formal offer, at which point Mars Bidco was the only one to do so. He said it would be his duty to shareholders to consider rival offers should any materialise.

Mars Bidco has indicated to the board of McCarthy & Stone that it would continue with the existing management team if its bid was successful.

Chris Millington, analyst at Bridgewell Securities, said: “The offer shows that the returns venture capitalists can make within the sector override any cyclical concerns about the industry.”