3i mulls £375m Erinaceous bid

UK-listed private equity group 3i has been linked with a £375 million bid for Erinaceous Group, a scandal-hit property business.

Erinaceous Group, a UK property services company, was forced to confirm today that it had been approached with a buyout offer, as its share price soared following weekend speculation of a £375 million (€404 million, $548 million) bid.

Erinaceous’ shares were up by over 20 percent this morning, following weekend reports that listed UK group 3i is planning to launch a £375million bid for the company.

In a statement to the stock exchange, Erinaceous did not confirm the identity of its private equity suitor, saying only that “it has received preliminary approaches which may or may not lead to an offer”.

A banking source confirmed 3i was the group involved, but said negotiations were still at “an extremely early stage”.

The property firm’s share price has dropped sharply since last year, following a scandal at its subsidiary Dunlop Haywards. The firm was alleged to have inflated valuations on commercial properties to allow buyers to raise bigger mortgages from lenders, sparking an investigation by the Serious Fraud Office, the Financial Services Authority and West Midlands Police. The £4.4 million potential costs of the fraud case have made a substantial dent in the company’s profits.

On Friday, its shares closed at 213.25 pence, down from its 52 week high of 389 pence in January.

According to the UK-based Daily Telegraph newspaper, chief operating officer Lucy Cummings and chief executive Neil Bellis, who own 17 percent of the stock, will probably join the bid.

Any bid would be the third high-profile UK public-private deal attempted by 3i this year.  It made an unsuccessful bid for estate agency Countrywide, which has since been sold to US firm Apollo Management, and has also agreed to buy support services firm Enterprise. Some analysts have suggested that the buyout firm would look to merge Enterprise and Erinaceous if a deal can be completed.

At 13:14 BST today, Erinaceous’ shares were trading at 257 pence, up 43.75 pence or 21 percent.