Chesterton board splits over Rowland takeover bid

A boardroom split has opened up at Chesterton, the upmarket estate agent, with two executives coming out against an offer which was yesterday recommended by the rest of the directors.

The 12p-a-share approach has come from Phoenix, a bid vehicle which has financial backing from Jonathan Rowland, the former dot.com entrepreneur and son of David "Spotty" Rowland, the property investor. Mohammed Jafari-Fini, an Iranian businessman who has been active in the UK real estate market since the late 1980s, is fronting the £10.2m Phoenix offer. He already has an 11 per cent stake in Chesterton.

Chesterton, which has residential and commercial property interests, has been under severe financial pressure for some time and has had three chief executives in the past 18 months. It spent much of 2002 in a series of takeover talks, which included Mr Jafari-Fini, but these were called off this year, as the offers were too conditional, and it was decided to restructure the company instead.

Neil List was brought in as chief executive and Mike Backs was hired as chief operating officer. The pair, who only started work eight weeks ago, yesterday broke with the rest of the board, saying that Chesterton was being undervalued. Mr List said he had already identified a number of disposals of non-core assets that would raise more than the value of the Phoenix bid. The rest of the Chesterton board said that Phoenix had financing in place and represented certainty for shareholders and the business.

Mr List said: "It's simply a question of value. Regrettably, we are in disagreement with the rest of the board.... We've done a damn good job in eight weeks and it would be very disappointing if this company goes out at this level."

Since arriving, Mr List has put in place a £3.5m cost-saving programme and identified a further £4m of cuts that can be made. He and Mr Backs bought 100,000 shares each yesterday, at 12.25p.