Crest Nicholson spurns £480m offer from Ronson's Heron

The housebuilder Crest Nicholson yesterday rebuffed a takeover bid from Heron Corporation, the privately owned property company led by the entrepreneur Gerald Ronson.

The housebuilder Crest Nicholson yesterday rebuffed a takeover bid from Heron Corporation, the privately owned property company led by the entrepreneur Gerald Ronson.

Crest said the proposed 345p to 430p a share offer from Heron, which could value the housebuilder at up to £480m, significantly undervalued the company. Crest has also denied Heron access to its books, requested for the purposes of carrying out due diligence, saying it will only give the property group the green light if it tables an offer Crest's board believes it can recommend to shareholders.

John Matthews, the chairman of Crest Nicholson, said: "For any offer for Crest Nicholson to be recommended by the board, it will need to fully reflect Crest's strengths and excellent prospects. Even at the top of this range, this proposal significantly undervalues Crest Nicholson and shareholders are recommended to take no action".

Mark Hughes, an analyst at Numis Securities, agreed that Heron's offer undervalues the housebuilder and takes the view that a 450p-to-460p offer would be more appropriate. Stephen Rawlinson, an analyst at Arbuthnot Securities, argued that Crest is worth even more and applauded the decision of the group's management not to open up the books to Heron. Mr Rawlinson argued "management would be best advised not to open their books for less than 500p".

However, Heron already has a strong foothold at Crest. The property developer holds a 23.4 per cent stake in the housebuilder, which it has steadily built up over the past 18 months. Heron indicated yesterday that it reserves the right to make an offer in excess of 430p a share and that it may table a bid without being given access to Crest's books.

Analysts believe that Crest's attraction to Heron lies in its extensive land bank. The housebuilder has one of the largest in the sector. In fact, one possible defence the group could use against Heron's advance is to offer to scale back the size of its land bank and return the proceeds to shareholders.

Heron's bid for Crest highlights the return to prominence of Mr Ronson, its 65-year old chairman, chief executive and major shareholder. The tycoon, who is thought to control 20 per cent of the company, suffered the virtual collapse of his empire in the property crash of the late eighties/early nineties. To make matters worse, he was also embroiled in the Guinness share-rigging scandal and was one of four businessmen to be convicted in the affair. Sentenced to a year in jail and fined £5m, he served six months in Ford Open prison.

But, via a major refinancing of Heron, which saw Mr Ronson bring in Rupert Murdoch, Bill Gates and the Oracle boss Larry Ellison as new backers, the group has enjoyed an amazing renaissance. Heron is now a major property player in Europe and Mr Ronson's stake is estimated to be worth more than £180m today.

In the past few years, the tycoon has developed a new kind of leisure attraction on the Continent, called Heron City. These are complexes that combine retail, eating, drinking, cinema and entertainment on a huge scale. There are Heron City schemes running in Madrid, Barcelona and Stockholm and Heron is said to be scouring the UK for suitable land in order to expand here.

Crest shares closed 37.25p higher at 434p yesterday, which values the company at £480m. The company has made a name for itself by not merely building new houses but specialising in "mixed-use developments" that combine residential properties with commercial ones. The idea is to try to regenerate areas by not just providing housing but also by building premises where industry can locate.

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