Chelsfield shares soar after bid approach by chairman Bernerd

Elliot Bernerd, the property magnate who runs Chelsfield, has made an offer to take the business private in a deal that could value it at about £850m.

Chelsfield, which is involved in some of the biggest property developments in London, including the site of the proposed Olympic stadium at Stratford, confirmed yesterday that it had received a preliminary approach from Mr Bernerd, its chairman, with the support of management. The company stressed, however, that matters were still at an early stage and there was no certainty that any offer would be made.

If an offer is forthcoming, market sources speculated that it would be pitched at about 300p-320p a share – an 18 per cent discount to Chelsfield's net asset value but a 21 per cent premium to the company's opening share price yesterday morning. Chelsfield shares closed 23 per cent higher last night at 304p.

A buyout of Chelsfield would be the property sector's biggest public-to-private deal since MEPC was bought by its management three years ago. That transaction netted its directors tens of millions of pounds.

Mr Bernerd has been eyeing a buyout for some time. Last week he told the magazine Property Week: "As to whether we will do an MBO, every management team in the property sector has looked at it." The Chelsfield chairman is being advised by Rothschild, the investment bank which helped him float Chelsfield in 1993, although he is not yet at the stage of having funding in place.

Cazenove, Chelsfield's broker, is thought to be advising the board's independent directors, led by the former P&O managing director Sir Bruce McPhail.

Nigel Hugill, Chelsfield's managing director, said that the long-term and speculative nature of the projects Chelsfield was involved in might mean it was better suited to being privately-owned.

The three big London projects Chelsfield is involved in – Stratford, the White City retail development in west London and the redevelopment of Paddington Basin – have a total estimated value of £5bn but will take at least 10 more years to complete. The Stratford site consists of 150 acres of old railway land adjacent to the new station being built to handle Channel Tunnel trains, and close to the planned site of the athletics stadium that would be built if London hosts the 2012 Olympics.

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