A US private equity giant has made a bid to acquire retirement housebuilder McCarthy & Stone, in a deal worth approximately £630m.
Bidco, a wholly owned indirect subsidiary of Lone Star Real Estate Fund, has offered 115p per share for the UK’s only national retirement developer.
The bid represents a 39% premium on Thursday’s closing price of 83p, but is still below pre-pandemic share levels.
Bidco said it believes the acquisition of McCarthy & Stone represents an attractive opportunity for Lone Star to gain exposure to the retirement living sector
McCarthy & Stone specialises in owner-occupied retirement housing for people over 60. In the first six months of this year, the business recorded an operating loss of £28.4m amid disruption caused by the pandemic.
The housebuilder’s directors are unanimously recommending that McCarthy & Stone shareholders vote in favour of the bid.
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 macroeconomic 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 at 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.”