McCarthy & Stone investors say yes to enlarged takeover bid

McCarthy & Stone shareholders have voted in favour of a higher takeover offer from the private equity firm Lone Star.

They approved the 120p per share deal, which values the retirement homes specialist at just under £650million, and is about £17million larger than the original proposal it made in October.

However, the bid price is still around a third lower than its pre-lockdown value in February, though it is nearly 45 per cent greater than its closing price of 83p per share the day before the first deal was revealed.

The Bournemouth-based company, which has designed over 58,000 retirement properties since its founding in 1977, said that nearly 80 per cent of votes were cast in favour of the new offer.

Chairman Paul Lester had previously recommended the original proposition as ‘fair value’ for investors, adding that it represented ‘a compelling and attractive opportunity for shareholders to realise and crystallise their investment.’

But they rejected the bid, with investors complaining that it was too low. One told the Sunday Times that the deal was ‘opportunistic’ and another said shareholders had undergone ‘a rocky ride.’

Anchorage Capital, McCarthy & Stone’s largest investor, is set to benefit most from the sale, with banking giant JP Morgan, and leading British blue-chip firms such as Royal London and M&G also receiving significant paydays.

It is the second time the housing developer has been wholly sold, having been taken over in 2006 by Scottish tycoon Sir Tom Hunter, and billionaire property investors David and Simon Reuben for more than £1billion.

Chief executive John Tonkiss described the accepted offer as ‘the best outcome for all of McCarthy & Stone’s stakeholders, including shareholders, homeowners and our employees.’

Bournemouth-based McCarthy & Stone specialises in building retirement homes 

He believes the Dallas-based group will allow them ‘to accelerate our strategy to address the structural undersupply of specialist retirement communities in the UK, building on the recent success of our multi-tenure and service-led offering.

‘We have been clear from the start that ensuring the best experience for our homeowners is our number one priority, and this will never change.’

Lone Star’s purchase is not its first venture into UK property, having swallowed up developer Quintain, which used to own the land around Wembley Stadium, in a £700million deal in 2015.

Its announcement comes almost four weeks after it warned it would make an annual loss in the last financial year due to completing far fewer home units – 832 compared to 2,402 in 2019 – as a result of disruption caused to the business by the pandemic.

Lone Star’s purchase of McCarthy & Stone is not its first venture into UK property. It bought Quintain, which used to own the land around Wembley Stadium, in 2015 for £700m

Like other construction firms, it was forced to close its building sites during the early parts of lockdown. But it has also admitted that the second wave had damaged sales, especially in the North and Midlands.

Furthermore, McCarthy & Stone customers have adopted a more cautious outlook this year. With an average age of 79, they are at much greater risk of contracting Covid-19. 

Tonkiss remarked in November that with ‘infection rates rising and lockdown measures in place, the retirement housing market is expected to remain difficult.’

He added though that the proportion of infections ‘across our developments continuing to trend significantly below that of comparable age groups in the wider UK population. This is a major endorsement of independent retirement living.’