Lone Star in £700m takeover of UK developer

London-listed Quintain Estates and Development has agreed terms with the Dallas-based firm after receiving a cash bid of 131 pence per share.

Lone Star Funds is set to buy London-listed property developer Quintain Estates and Development in a deal valued at around £700 million (€988 million; $1.1 billion), according to a stock market announcement today.

The Dallas-based real estate investment manager has bid 131 pence per share, which is a premium of approximately 22.4 percent to the closing price of 107 pence on Tuesday, which the Quintain directors will unanimously recommend.

The bid also represents a 7.4 percent premium to the Quintain's net asset value at the end of March.

“The proposed acquisition represents a unique opportunity for Lone Star to gain further exposure to residential and commercial assets in London,” commented Angus Dodd, senior managing director and co-head of European real estate investments, Lone Star Europe.

Quintain holds land around London's Wembley Stadium, which Dodd said represented an attractive urban renewable project: “Wembley Park is one of the largest and most exciting urban renewal projects in Europe and complements our experience in this segment of the market. We very much look forward to working with the Quintain team on Wembley and the rest of the portfolio.”

The all-cash bid from Lone Star has come from the firm’s Lone Star Real Estate Fund IV which closed in April. The firm was able to hold a first and final close at the fund’s hard cap of $5.5 billion.

In addition to the $5.5 billion raised from institutional investors, the fund also took in capital from Lone Star chairman John Grayken, and Lone Star’s asset management company Hudson Advisors, bringing LSREF IV’s total equity haul to $5.9 billion.

Quintain is being advised by JP Morgan Cazenove and Lazard. Morgan Stanley is advising Lone Star on the transaction.