Chesterton rebels prepare to take 'moral stand' on takeover offer

The two former rebel directors of the property company Chesterton International who were ousted last week will today mount an attack on its board for ignoring shareholder interests in the takeover battle for the company.

Neil List and Mike Backs are today publishing a circular to shareholders that debunks the value of the 12p-a-share cash offer on the table from Phoenix Acquisitions, which the board has recommended shareholders accept. Mr List and Mr Backs will put forward alternative advice to shareholders on the offer.

The pair were dismissed from the board as chief executive and chief operating officer last week after opposing the bid and making it public that the company had received another takeover approach alongside the Phoenix proposition. This was in direct defiance of an order given by the company's chairman, Peter Brooks.

Mr List, who yesterday refused to rule out making an offer for the company himself, said he was taking a moral stand against the board in the interest of shareholders. "I could have just walked away from this and kept my mouth shut. But that would be wrong – it was my overriding duty to inform shareholders to take this action. We want to set out the reasons why we believe a 12p offer is far too low. Shareholders will have the offer document but I believe they should have been told that another party was at least having a look at the company before they fill it in," he said yesterday.

He and Mr Backs are still directors of the company and both own 100,000 shares in Chesterton. They were in the process of making an offer for the company earlier this year when they were snapped up by the management to run the company. Mr List was Chesterton's third chief executive in 18 months, during which time the company has been under severe financial pressure.

A spokesman for Chesterton yesterday said the board has always acted in the best interests of shareholders. "The majority of the board continues to recommend the Phoenix offer," he said. He confirmed that Chesterton had provided financial information to an unnamed party in response to a request, but maintained that the approach was too preliminary to warrant an announcement.

The Phoenix bid, led by Mohammed Jafari-Fini, Chesterton's 11 per cent shareholder, has the support of 40 per cent of investors, on the condition that a bid offering a 10 per cent higher premium does not emerge.