McCarthy chairman abandons bid to go private

John Mccarthy, the chairman of the retirement homes builder McCarthy & Stone, yesterday walked away from bidding for the company he founded, but dealt a parting blow to the confidence of the company's prospects.

"The housing market is undoubtedly weakening and I expect more difficult times ahead," Mr McCarthy said as he withdrew his interest in the company. Shares in McCarthy plummeted 12 per cent to 457p after yesterday's announcement.

The statement follows a series of upbeat news from the company. At its half-year results in April, which revealed pre-tax profits had leapt 80 per cent, Mr McCarthy said he was "confident" the company would "deliver another good performance in the current year". He said trading conditions were "buoyant" and the company had little exposure to the London housing market, where sales price growth has dropped. Despite the general cooling off in house price inflation, he said the company was "continuing to report healthy levels of enquiries, visitors and reservations". Last week, the company said it would easily beat profit forecasts for the year.

Mr McCarthy's position as chairman may now be untenable, given his gloomy forecast and failed bid attempt. Mr McCarthy is due to retire from the company in December and had intended to merge McCarthy with the business of his sons, Churchill Retirement Living. The independent directors rejected Mr McCarthy's bid last month, saying it did not reflect the right value of the company. It is thought the company wanted an offer in the region of £600m, which would be more than 580p a share.

Its shares have risen 38 per cent in the past two months.