Chesterton boardroom rebels sacked after opposing bid

The chief executive and chief operating officer of Chesterton, the upmarket estate agent, were fired, as a boardroom dispute escalated dramatically. They will receive no pay-off.

Neil List, the chief executive, and Mike Backs, the chief operating officer, who joined the company less than three months ago, had disagreed with the rest of the board who had recommended a £10m takeover bid last month. They said the bid substantially undervalued the business and claimed they could raise more money by disposing of non-core assets. Chesterton has been under severe financial pressure for 18 months and Mr List was the company's third chief executive in that time.

That boardroom split was noted in the announcement that recommended the bid from a consortium called Phoenix. However, at the start of this month, when Phoenix posted its offer document, Mr List and Mr Backs put out their own announcement. This not only reiterated their rejection of the Phoenix proposition, but also announced another possible bidder had emerged.

It was the news on this second approach that led to the dismissal of the pair. Chesterton's chairman, Peter Brooks, called them in on Tuesday night to tell them that were being "terminated" as employees, though they remain directors – only shareholders at a general meeting of the company can remove them from the board.

Knowing that a second party had asked for information on the company and hearing that Mr List thought shareholders should be informed of it, Mr Brooks sent him an email on 29 April forbidding its disclosure. Mr Brooks maintains that it was just too "preliminary" and the company's advisers, Close Brothers, said no announcement was necessary.

Mr Brooks said: "It is one thing to express differing views, it is quite another to ignore an instruction and make a premature announcement."

The third party's name was never disclosed but they were judged by Close Brothers to be "bone fide potential offerors" and given access to the same financial information Phoenix had. According to Mr List, this second potential bidder has been conducting "due diligence".

Mr List said it was a "tough decision" to ignore the instruction from Mr Brooks but he had an overriding "fiduciary duty" to shareholders to inform them of the second approach. "We strongly believed ... this was a material fact that should be put before shareholders," he said.

He and Mr Backs plan to write to shareholders, next week, to set out their position. Mr List was not aware of the fact that Chesterton will pay him no compensation for loss of office until informed of this by The Independent. He said he would be consulting a lawyer.