Duke Street Capital is again seeking offers for Paragon Healthcare, a residential care business for people with learning difficulties, after the auction for the business ran into problems in the final round.
In a highly unusual move, the private-equity firm is asking earlier bidders to resubmit offers, according to sources close to the auction. The two shortlisted bidders - the rival private-equity firm Apax Partners and Consensus Business Group, the buyout vehicle of the property tycoon Vincent Tchenguiz - are understood to have attempted to drive the price down to a level Duke Street would not accept.
Initial reports had suggested the auction for Paragon, run by the investment bank Close Brothers, would attract bids of about £350m, but the final offers are thought to have been almost £50m less than that price. Other earlier bidders, thought to include the US investment firm Fortress Investments, will be invited to re-submit offers for the business.
A spokesman for Duke Street said last night the company had not abandoned the auction and was involved in ongoing negotiations with a number of interested parties.
Paragon has 220 residential care homes that provide care for more than 1,300 people. Duke Street bought the business in 2001 for an undisclosed sum, and has made four bolt-on acquisitions since then, including the August 2002 purchase of Thelma Turner Homes, a provider of long-term care for patients with severe dietary and behavioural problems.
Duke Street refinanced the business in May 2004 with £162m of funding provided by the investment bank Dresdner Kleinwort Wasserstein. In the year to March 2004 Paragon had turnover of £75.7m.
Among it other assets, Duke Street owns the Esporta chain of healthcare clubs and the Focus DIY chain. The company is in a period of transition after the shock departure of its founder, Eddie Truell, in November.Reuse content