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Quality Care in frame for takeover

Quality Care Homes, the Darlington-based nursing home group, saw its shares soar 37p to 311p yesterday after revealing that it was in bid talks. Any deal close to last night's closing price would put a price tag of pounds 42.6m on the company and bring a windfall of more than pounds 20m for the group's founder and executive chairman, Duncan Bannatyne, a local entrepreneur. Michael Fallon, the former Conservative sports minister, is another director who could be expected to benefit from any takeover.

The identity of the potential acquirer was not revealed yesterday, but speculation centred on an unnamed US real estate investment trust. Discussions are understood to have been under way for around two months, with the final offer expected to be close to the current market price. Two years ago, Mr Bannatyne, who with family trusts owns just over 50 per cent of the company, rejected a bid at 330p a share from Exceler Health Care, an offshoot of the US nursing home group Sun Healthcare now renamed Ashbourne. CrestaCare, a rival British nursing home group, was also a disappointed bidder at that stage.

Yesterday, the only information from Quality Care was a short statement from the board saying it was involved in discussions which "may or may not lead to an offer for the company". It promised to keep shareholders informed of further developments.

The company has seen pre-tax profits rise steadily from pounds 1.84m in 1992 to pounds 5.61m in the 12 months to last October. However, Paul Saper of nursing home analysts Laing & Buisson said yesterday that the group would struggle to meet stockbrokers' forecasts of between pounds 6.2m and pounds 6.5m this year. He suggested that the actual figure would come in at under pounds 5m, after deducting normal industry depreciation charges. The group would find the going increasingly tough as local authority budgets, the principal form of funding for private nursing homes, were squeezed even harder, he claimed.