AIM-listed venture capitalist thought to be behind 345p-a-share offer for Gleeson.

Investment company Castle is understood to be behind the mystery bid for Gleeson earlier this week

Contractor Gleeson this week revealed that it was the latest takeover target in the industry after receiving a £200m approach from a quoted venture capitalist.

Gleeson responded to speculation that it had received an approach by issuing a statement to the stock exchange which said it had “formally rejected an outline proposal from a third party AIM quoted investment company with no connection with the construction sector.”

Gleeson declined to reveal the identity of the potential bidder but it is understood to be Castle, quoted on the Alternative Investment Market and a 9% shareholder in Gleeson.

Castle made an offer of 345p a share for Gleeson, but it is understood that the board rejected the bid because it was predominantly a paper offer and it was not clear how Castle would access the funds for a possible cash alternative.

Gleeson sold its building division to its management team led by Martin Smout in August last year after it made a £16.6m loss on that part of the business in the second half of the last financial year.

Gleeson retained a small stake in the building business and chairman Dermot Gleeson sits on the board, but it’s core business is now UK civil engineering and housebuilding. Despite the fact that Gleeson has rejected the advances of Castle, it is likely that other companies will now take a look to see if there is value in a takeover.

“The landscape is getting smaller, especially among the bigger players. Gleeson is ripe for takeover.”

City source

The attraction of the business lies in its regeneration arm and its strategic landbank.

Commenting on the quoted construction sector, one City source said: “The landscape is getting smaller, especially among the bigger players. Gleeson is ripe for takeover.”

Shares in the company, which has a market capitalisation of around £180m, rose 4% to 347.25p on Monday when it made the announcement to the stock exchange, suggesting the market believes there is more value in the company than the £200m offered by Castle.

Gleeson is just the latest in a string of companies to be eyed as potential takeover targets within the construction industry. Carillion has launched a formal bid for Mowlem, and Balfour Beatty is also considering a bid. Last year John Laing also revealed that it had received an approach which it rejected.

City experts this week said that Alfred McAlpine was an obvious target because its troubles last year have left the company considering its options. Kier, Morgan Sindall and Costain are also favourites for takeover, the latter thought of as a good company but one that has balance sheet issues.