Lone Star has agreed terms to acquire retirement home developer McCarthy & Stone for £630m.
The cash offer of 115p per share by an indirect subsidiary of its Lone Star real estate fund VI represents a 38.6% premium to the last closing price on 22 October of 83p per share.
McCarthy & Stone’s directors, which own 902,565 (0.2%) of the firm’s issued shares, intend to recommend the buyout to the rest of its shareholders.
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.
“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.”
The acquisition of McCarthy & Stone is seen by Lone Star as an opportunity for it to gain exposure to the retirement living sector.
Donald Quintin, president of 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.”
McCarthy & Stone’s directors have been advised by Rothschild & Co and Deutsche Bank and Knight Frank was the property adviser Lone Star.
McCarthy & Stone reporterd a pretax loss of £91.3m for the six months to the end of April and revenue of £101.1m, which was down by almost two-thirds on the same period the previous year.
The firm said the financial impact of the Covid-19 crisis was likely to be felt even more acutely during the second half of the year.
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