US private equity firm Lone Star has made a bid for retirement housebuilder McCarthy & Stone (MCS.L), in a deal that values the company at £630m ($430m).
Bidco, a subsidiary of Lone Star Real Estate Fund VI, proposed a 115 pence-per-share offer for the business. It represented a 39% premium to Thursday’s closing share price of 83p, but was still substantially below the pre-pandemic price of 158p in mid-February.
The US property investor has joined a string of firms to swoop in on discounted UK assets. It comes as Canadian asset manager Brookfield has been increasing its stake in commercial landlord British Land.
Last month, Lone Star was also in the race to buy supermarket chain Asda but dropped out as it was unable to meet the price sought by its owner Walmart (WMT).
McCarthy & Stone, which owns Wembley Park homes developer Quintain, specialises in land buying, developing, selling and managing retirement communities, mostly for people in their seventies. It was established more than 40 years ago.
Donald Quintin, president of Lone Star Europe, said on Friday that McCarthy is in a “market underpinned by clear fundamentals: a rapidly ageing population and a structural undersupply of suitable housing options for older people.”
The industry suffered as the country went into lockdown in March, as people were restricted to stay at home to prevent the spread of the coronavirus.
Directors at the Bournemouth-based builder are unanimously recommending that shareholders vote in favour of the bid.
Paul Lester, chairman of McCarthy & Stone, said: “The all-cash offer represents a compelling and attractive opportunity for shareholders to realise and crystallise their investment in McCarthy & Stone in the near term and also provides a meaningful premium to the prevailing share price notwithstanding the backdrop of the wider risks posed by the political and macro-economic environment.”
He added: “We believe that Lone Star would provide a complementary partner for McCarthy & Stone stakeholders and along with the investment in the business that Lone Star can provide, will enable further improvements of its transformation strategy and allow McCarthy & Stone to capitalise on its growing rental and multi-tenure offering which would underpin the long-term growth of McCarthy & Stone."
Earlier in the year McCarthy posted a pre-tax loss of £91.3m for the six months to the end of April, down from a £3.6m profit the year before.
After a 40% jump on Friday on the back of the news, the company was valued £622m, however, its share price still has lost two thirds of its market value in the past five years.
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