Reubens strike deal with Tchenguiz over McCarthy

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The Independent Online

The billionaire Reuben brothers tightened their grip on the retirement home builder McCarthy & Stone yesterday, striking a deal with the rival bidder Robert Tchenguiz to ensure he does not attempt to trump their consortium's recommended £1.1bn offer.

In a statement to the stock market, the Reuben brothers' consortium, which includes the retail entrepreneur Sir Tom Hunter and Bank of Scotland, said Mr Tchenguiz had agreed not to make a bid for McCarthy & Stone for at least 12 months.

In return, the consortium, which operates under the name Mother Bidco, has agreed to sell Mr Tchenguiz the rights to all ground rents and house manager income derived from McCarthy & Stone properties that are completed before the first anniversary of the deal. Mr Tchenguiz has also been given an option to take a £25m stake in the company should the Mother bid be successful.

Mother Bidco secured a board recommendation for its offer after trumping a bid from a rival consortium headed by Barclays Private Equity and Permira at the start of last month. The Barclays consortium, which is known as Mars Bidco, had previously secured the management's support for its 1,030p-a-share offer. However, the board switched its recommendation when Mother made an offer of 1,075p.

As well as agreeing not to pursue a separate bid for the company, Mr Tchenguiz has agreed not to join forces with Mars in any capacity over the next two years.

Although shares in McCarthy & Stone fell as much as 10p to 1,075p yesterday, they stayed above the level of the Mother offer, reflecting some continued optimism that Mars may yet counter with another bid for the group.

However, Simon Brown, an analyst at Williams de Broë, said he believed it was now unlikely that a further bid from Mars would appear.

"I think if they were going to do that, they should have done it fairly quickly after the Mother Bidco offer came in," he said. "While I think £10 a share was too cheap, I think £11 was never going to be achievable."