Hunter rebuffed in £660m offer for Crest Nicholson

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The Independent Online

Shares in Crest Nicholson surged more than 8 per cent on hopes of a takeover after the UK housebuilder spurned a £660m approach from a consortium comprising Bank of Scotland and the retail tycoon Tom Hunter's West Coast Capital vehicle.

If the consortium - known as Castle Bidco - succeeds in buying the residential housebuilder, it will be the second FTSE 250 housebuilder that HBOS - which owns Bank of Scotland - and Mr Hunter have secured this year after the two parties won a bidding war for McCarthy & Stone.

Castle offered 585p per Crest Nicolson share after it purchased a near-27 per cent stake in the construction company at that level. Bank of Scotland owns a further 4 per cent stake in Crest Nicholson through its Insight Investment unit.

Castle has purchased Gerald Ronson's 23 per cent stake in Crest Nicholson. Mr Ronson was the housebuilder's largest shareholder after he made an approach to buy the company in March last year. However, he was blocked from conducting due diligence.

Despite the rejection of the bid, shares in the stock leapt to 618.5p on hopes of a higher offer. At that level, the company is valued at about £700m.

Sources familiar with the situation said the prospects of a counter-bid appear unlikely given Castle Bidco owns more than a quarter of the company's shares.

Bank of Scotland and Tom Hunter, in partnership with the billionaire property tycoons Simon and David Reuben, won the bidding war for retirement homes developer McCarthy & Stone earlier this year after lodging a 1,075p-a-share offer valuing the company at £1.1bn. That proved too much for rival bidders Barclays Capital and Permira given McCarthy & Stone's net asset value of 438p. In contrast, Crest Nicholson's last reported net asset value was 254p.

A Bank of Scotland spokesman said that its property investment arm has made 20 deals this year for a combined total of £2.4bn. He added that the bank also backed Mr Hunter in the £311m purchase of Wyevale Garden Centres in April this year. He declined to comment on whether the consortium would raise its bid for Crest Nicholson. A statement from Castle Bidco said a further announcement would be made in due course.

Leslie Kent, an analyst at JM Finn, said further consolidation in the UK housebuilding market could be around the corner. "It was Mark Twain that said 'Buy land. They've stopped making it.' Land is the key to all this activity," Mr Kent said.

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