The board of McCarthy & Stone, a UK retirement homes builder, has withdrawn its earlier recommendation of an offer made by Permira and Barclays Capital in favour of a revised bid by a consortium including West Coast Capital’s Tom Hunter, Bank of Scotland and property tycoons the Reuben brothers.
A source close to Permira said: “Permira thought 1030p was a winning move. It now looks like they’re blown out of the water. Time will tell whether they have a surge of testosterone. But it is looking unlikely.”
The Hunter consortium, known as Mother Bidco, earlier today increased its offer for McCarthy & Stone to 1,075 pence per share, valuing the business at £1.1 billion (€1.6 billion). Bank of Scotland will provide financing if its offer is accepted.
Last week, Permira and Barclays Capital, a European buyout firm and the investment banking arm of the UK bank respectively, upped their previous 1,000 pence per share offer to 1,030 pence to match a bid by Hunter’s consortium. The Permira consortium made its offer through its Mars Bidco vehicle.
McCarthy & Stone released a statement earlier today which said that it would withdraw its support for the Permira offer and pay a break fee agreed with the consortium: “In view of the significantly higher value which this offer represents compared with the previous offer of £10.30 per share from Mars Bidco Limited, the board, which has been so advised by UBS and Hawkpoint, considers the terms of the offer from Mother Bidco to be fair and reasonable and therefore has no hesitation in recommending it to shareholders.
“As a result, the board is withdrawing its recommendation of the earlier offer made by Mars Bidco Limited on behalf of the consortium formed at the direction of Barclays Capital PIA and funds advised by Permira Advisers LLP and will pay to Mars Bidco limited the agreed inducement fee, thereby terminating the implementation agreement with it.”
The Hunter consortium’s previous attempts had stalled on the basis that Permira’s recommended offer had included a £10 million break fee should the deal break down and also precluded McCarthy & Stone from offering a similar arrangement to rival bidders.
Permira was not immediately available for comment.
McCarthy & Stone’s shares were trading at 1,090 pence at 3pm BST today, up from yesterday’s closing price of 1,077 pence.