Private equity giant Lone Star has made a recommended bid for McCarthy & Stone that values the retirement homes group at £630 million.
The bid by a subsidiary of Lone Star Real Estate Fund VI is for the acquisition of the entire issued and to be issued share capital of Bournemouth-based McCarthy & Stone.
The Board of McCarthy & Stone has unanimously recommended the offer which represents a premium of 38.6% to the closing share price of 83p at October 22, 2020 and 57.3% premium to the volume-weighted average price over the three months to October 22.
Lone Star has stated its excitement at the opportunity to further support the “ongoing transformation of the business which operates in an attractive market that is underpinned by the structural undersupply of appropriate housing to meet the long-term demographic needs of an ageing Britain”.
McCarthy & Stone is one of the UK’s largest developer and manager of retirement communities and said it will continue to focus on its “transformational strategy to capitalise on our growing rental and multi-tenure offering that underpins our long-term growth”.
McCarthy & Stone is a leading developer and manager of retirement communities in the UK, with a significant market share. It buys land and then builds, sells and manages retirement developments. It has built and sold more than 58,000 properties across more than 1,300 retirement developments since 1977.
Paul Lester, chairman of McCarthy & Stone, said: “The McCarthy & Stone Directors believe that the offer from Lone Star represents fair value for shareholders and unanimously intends to recommend the offer. 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.
“We believe that Lone Star would provide a complementary partner for McCarthy & Stone’s 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.”
Donald Quintin, president, Lone Star Europe, said: “As a leading developer and manager of retirement communities in the UK, McCarthy & Stone represents an attractive opportunity in a market underpinned by clear fundamentals: a rapidly ageing population and a structural undersupply of suitable housing options for older people.
“Lone Star shares the McCarthy & Stone management team’s vision for growth. With our proven experience in developing property-related businesses, we believe our partnership will enable McCarthy & Stone to accelerate its transformation, which aligns with the Government’s goal of increasing the supply of attractive housing options in the UK. We look forward to partnering with McCarthy & Stone’s management and employees to further support the company’s ongoing transformation.”