Crest Nicholson could attract higher bid of 650p a share

Crest Nicholson has rejected a bid approach by the Castle Bidco consortium at 585p a share, which values Crest at £660m.

Mark Hake, analyst with stockbroker Merrill Lynch, thinks that a fair value for Crest shares is 650p.

Castle Bidco attempted to buy McCarthy & Stone earlier this year.

Crest, an urban regeneration group, has remained listed on the Stock Exchange after seeing off an earlier approach from Gerald Ronson’s Heron Corporation one year ago.

Castle Bidco is led by Sir Tom Hunter, the Scottish entrepreneur. His consortium, which contains HBOS, the bank, already owns 27% of Crest’s shares, including Heron’s former 23% stake, Ronson now having abandoned his interest in Crest.

Crest’s share price prior to the recent bid stood at 571p. The latest news pushed them higher to 620p, which suggests that the City believes there is still more to come.

The fact that Castle Bidco holds 27% of Crest’s shares makes it less likely that a new bidder will emerge.