Consortium's £1bn bid for McCarthy & Stone

The biggest-ever deal in the UK housebuilding sector got underway over the weekend with the £1bn bid for McCarthy & Stone, the UK's largest player in the specialist retirement homes sector.

McCarthy's board had asked interested bidders to show their cards by Friday of last week and the firm offer, pitched at 1,000p a share, came from a consortium with the working title of Mars Bidco which includes Permira, a private equity group, and Barclays Capital.

A spokesman for McCarthy said: "The offer was accepted as it gives shareholders certainty and there were no strings attached. It is a very fair offer."

A spokesman for Mars Bidco said: "The offer is fully financed and represents a high degree of certainty.

"The consortium was specifically formed for this bid. Private equity groups are interested in bidding for publicly quoted groups and taking them private because the cost of [borrowing] money has come down."

There is a break fee of 1% so it would cost McCarthy's board £10m if they switched to backing a higher bid. That is a possibility, as another potential bid has been unveiled, pitched slightly higher at 1,030p.

The second bid vehicle, Broomco, contains the interests of investors Simon and David Reuben. Vincent Tchenguiz, a multimillionaire property tycoon, is also thought likely to submit a third bid.

If McCarthy's takeover goes ahead, its well regarded management team is likely to stay in place.

* The City is also scenting the possibility of housebuilder Wilson Bowden coming on to the market as a result of a statement revealing that David Wilson, chairman and founder, had invited NM Rothschild to conduct a review of the 33% of the company's shares that are in the hands of the family and their trusts. Wilson Bowden is currently worth £1.4bn.

[Contract Journal, 19 July 2006, p. 1]