It's family business as son plans cheeky buyout of Berkeley from his father

Pidgley Jnr emerges as potential bidder for housebuilder founded by Pidgley Snr

The oedipal complex is not often applied to the UK housebuilding sector but it must have some currency at Berkeley Group, where the founder's son says he wants to make a bid for the company.

There has been talk for the last week that Tony Pidgley, chief executive and founder of Berkeley, was putting together a management buyout. Yesterday it emerged that Tony Pidgley did indeed want to take the company private but it is Tony K Pidgley, the son, and not Tony W Pidgley, the father, who is behind it. And it looks like this may end up as a tough father and son battle, with the older Pidgley – a legend in the housebuilding sector – making clear that his son had better come up with a good price or he'll be shown the door.

Pidgley junior learnt the business at his father's knee, then went off and, with the help of a family loan, founded his own housebuilder, Thirlstone Homes, which was later bought by Berkeley. Under the £15m deal in 1998, which the City was never happy about, he then joined the Berkeley board. However, he didn't last long, leaving two years later, complaining about the limits of life as a public company, and founded another start-up builder called Cadenza. It is thought that he figured he could simply make much more money for himself running a private concern.

Now, at the age of 33, in a supremely cheeky corporate move, Pidgley junior says he wants to make a return by buying Berkeley and he is busily trying to put in place the necessary financing.

What has really shocked the City and the housebuilding sector is that Pidgley senior says he has nothing to do with the possible offer. "I'm at the receiving end," says the elder Pidgley. Industry sources say he is genuinely mystified by it.

He says the first he knew of it is when he read a speculative article about the idea over the weekend. Pidgley senior got straight on the phone to his son, only to be told it was true that something was in the offing.

"My only conversation with him about it was on Saturday. I asked him what was going on," says the 55-year-old. "He said he was considering it [an offer] ... When the time is right he said he'd like to come and talk to me."

Yesterday Pidgley junior owned up to his interest in a statement to the Stock Exchange. He is "evaluating a possible approach" for Berkeley but added that "matters are at a very preliminary stage". No price was mentioned and any offer is dependent on "satisfactory due diligence and arranging financing". The father is philosophical about the prospect of the bid and, if he was at all annoyed about it, he did not show it. Others says he is probably quietly proud of what his son is up to.

"If he pays the right price, his money is as good as anyone's ... I suppose he considers that he knows this company. He grew up around it. Perhaps it's always been his dream to run Berkeley. I don't know."

What father and son are very keen to dismiss is any notion that there is a family feud – that this is Pidgley junior landing a blow on dad's life's work. Certainly the elder Pidgley is remarkably relaxed about the situation.

"Business is business and family is family," says the patriarch. "I have an ambitious son ... We have a good relationship. We see each other at Christmas and on other days, through highs and lows. I enjoy his company."

Pidgley junior was remaining coy about the details of his plan, simply saying that he is talking with his advisors and that the newspaper articles had forced out yesterday's statement. He didn't name his advisors but he is thought to have hooked up with Merrill Lynch. He says it was not pleasant to read reports of a family feud.

"I don't believe there's a situation there. We have a normal relationship ... we're fine," he says.

A weekend report suggested that an offer would be pitched at 780p a share. That may be a significant premium to Berkeley's recent share price – which closed up 5 per cent yesterday at 687.5p. But Pidgley senior is adamant that it must come at a significant premium to the company's net asset value, which is considerably more. And he says there is no conflict of interest that would take him out of the task of considering an offer from his son.

"We've got to make sure he's got the financing ... I could not recommend any offer not in excess of net asset value," he says.

For the current year, net asset value is forecast at over 800p – valuing the company at £1.1bn, plus £300m of debt. Some in the City reckon the real NAV could be well over 1,000p. Pidgley senior, who owns 3 million shares or 2 per cent of the company, says the obvious response might be to put forward he own buyout proposal but he has no intention of doing so. With unusual candour, he says he would get tied up in conflicts of interest, in both knowing how much the business is properly worth while trying to get it at a good price.

Father and son both have a potent entrepreneurial drive but while Pidgley senior came from a very poor family, junior is a polo-playing former public schoolboy. The adopted son of gypsies, whose parents once lived in an abandoned railway carriage, Pidgley senior left school before finishing his education. He soon started his own business, a plant hire venture which he sold to housebuilder Crest Nicholson, which he then joined at the age of 21. In 1976, at the age of 27, he left to found Berkeley with a business partner, Jim Farrer, and he has never looked back. The company took a full market listing in 1985.

Berkeley is the star of the housebuilding sector, pioneering regeneration schemes in inner cities before it became fashionable and living off fat margins that rivals can only aspire to.

That is why it is a strange target for a bid because few people think it could be run better in other hands. The housebuilders that have been bid for in recent years are those that struggled.

However, Berkeley is very exposed to London and the South-east market, where 80 per cent of its business is done. So, as fears of a housing correction have mounted over the last 18 months, Berkeley shares have suffered accordingly. Normally rated at a premium to the rest of the sector, Berkeley has been trading at a bigger discount to net asset value than much less highly regarded housebuilders. The Pidgley junior approach will be helpful to Berkeley in at least reminding the City of the poor rating given to the shares and that there could be considerable upside here.

So Pidgley junior is coming in at a low point in the share price, betting that the London market will come good again soon enough. The gamble is that institutional shareholders are so scared of a housing market crash that they will run for the exit, given the chance. Pidgley senior can be relied upon to counsel against such a short-term view. It remains to be seen whether father or son will prove more persuasive.