Takeover speculation intensifies after Gerald Ronson increases Heron International’s stake to 19.6%

Speculation that housebuilder and regeneration specialist Crest Nicholson is the target of a takeover bid rose this week as Gerald Ronson’s Heron International increased its stake in the company again.

Property developer Heron bought 1.4 million shares last week, raising its stake in Crest Nicholson to 19.6%.

Chief executive Ronson first bought shares in the company in August 2003, when he took a 3% stake, and is now the biggest shareholder.

He has continued to increase his shareholding over the past 12 months.

If Heron raises its stake to 30%, Ronson will be required to make a formal offer for the company, under stock exchange takeover rules.

Ronson has remained tight-lipped about his intentions since he started building up the stake. It is understood that he has repeatedly declined requests to talk to the management at Crest Nicholson.

Both Heron and Crest Nicholson, which is thought to be unhappy about Ronson’s advances, declined to comment this week.

Heron is best known for landmark offices – including its proposed Heron Tower in the City of London – and leisure schemes, but it started out as a housebuilder.

At a time when John Prescott, the deputy prime minister, is stressing the importance of social housing and urban regeneration, Crest Nicholson is well placed to capitalise on this market.

Prescott and Tony Blair visited Ingress Park, Crest Nicholson’s regeneration scheme at Greenhithe, Kent, in July 2003. It was heralded as an example of high-quality homes needed in the Thames Gateway.

Ronson has no track record of buying public companies. City sources this week said that Ronson might be planning to build up his stake to nearly 30%, and then sell it on to another party that hoped to take over the company.

Crest Nicholson shares rose 2% last week to 354.5p. It has a market capitalisation of £396m and reported a turnover of £562m in 2003.

On Tuesday, Crest Nicholson announced that it had formed a 50:50 joint venture with property company Grosvenor to undertake the £1bn regeneration of Bath Western Riverside.

Plans for the scheme, covering 26 ha of brownfield land to the west of the city centre, include 2000 residential units, 100,000 m2 of commercial space, and infrastructure.