Permira, Barclays concede defeat on McCarthy & Stone

Tom Hunter and Bank of Scotland’s £1.1bn bid for care homes builder McCarthy & Stone has trumped Permira and Barclays Capital, who decided not to increase their offer.

Permira, the European buyout firm, and Barclays Capital, the investment banking arm of the UK bank, have formally given up in their pursuit of McCarthy & Stone, a UK retirement homes builder.

The pair have thrown in the towel a month after McCarthy & Stone’s board withdrew its recommendation for their bid, which offered £10.30 a share on 28 July.

Instead the board decided to back a £10.75 per share offer made by Mother Bidco, the bid vehicle of West Coast Capital’s Tom Hunter, Bank of Scotland and property tycoons David and Simon Reuben. The latter offer valued the business at £1.1 billion (€1.6 billion; $2 billion).

Permira and Barclays Capital said today that it will not increase its bid price or amend the terms of its proposal. McCarthy & Stone reiterated its unanimous support for the Hunter consortium bid.

It emerged on Friday that the Hunter consortium has struck a deal with Consensus Business Group, the property company run by property entrepreneur Vincent Tchenguiz as part of the McCarthy buyout.

Tchenguiz will be given exclusivity on the prospective sale of McCarthy & Stone ground rents in return for not making a bid to acquire a stake in the business in the next 12 months.

The deal has been thrashed out between Mother Bidco and Rock Acquisitions I Limited, a company ultimately controlled by the Tchenguiz Family Trust and Vincent Tchenguiz, the chief executive of Consensus Business Group.

Tchenguiz will receive rights to receive the ground rents and house manager income at properties where development is completed by McCarthy & Stone before the first anniversary of the acquisition becoming unconditional and will be allowed to take a £25 million stake in the company.