However, analysts doubt the deal will go through. One said: “The shareholders really like the company and will probably not recommend a bid under £6 a share. I cannot see the family being able to raise £600m.”
John McCarthy holds a 13% stake in McCarthy & Stone, which had a turnover for the 12 months to 31 August 2002 of £188m. But his sons run another retirement home specialist, Churchill Retirement Living, that has a turnover of just £11.6m.
Mike Foster, an analyst with KBC Peel Hunt, said that McCarthy & Stone was not an obvious target, given its strong performance. He said: “I see no real benefit to anyone in this deal. The shares will have to be bought at a significant premium.”
Foster added that Spencer and Clinton were well-positioned to develop their own business, which was rebranded as Churchill in March this year, with the intention of eating into the 75% market share of their father’s company. He said: “Why don’t they just replicate McCarthy & Stone, given that they’ve got the advantage of knowing how it works?”
But a rival retirement homes specialist approved of the proposal. He said: “McCarthy & Stone has no obvious successor in place, and John is in his 60s now. I guess eyeing up dad’s inheritance is high up Spencer and Clinton’s list.”