12 September 2004 – Sunday Times
The Reuben brothers are considering tabling a £2 billion bid for Chelsfield, after the property company received offers from rival Australian companies.
Simon Reuben, who with his brother David controls 35% of the company, has told friends that he will not let Chelsfield be sold cheaply and, if necessary, he will make a serious offer for the company. Chelsfield is at the centre of a potential bid auction, just three months after it was taken private. The reason that this extraordinary situation has emerged is because the Reuben brothers and Elliott Bernerd, the group’s chairman, have clashed on management styles.
The two sides said they remain friends, but there has been tension almost since the ink dried on the contract. Unless a compromise can be found, the Reubens may have to be bought out, or take 100% control.The Reubens have invested £140m in the deal but they do not have executive control of the company.
This conflict has led to Multiplex, Australia’s biggest contractor, which is building the Wembley stadium, to make a bid. John Roberts, chairman of Multiplex, is a friend of Bernerd, and in the Chelsfield buyout his company picked up a 6% stake. Multiplex is being advised by UBS, but it is thought its first offer was too low. Three days after it made its bid, another one was made by Westfield, the Australian retail-property giant. It is believed that Westfield is being advised by Citigroup.
The Reubens have the firepower to buy out other Chelsfield investors. If they or the Australians do buy Chelsfield, Bernerd would step down and set up another company. But Bernerd could still mount his own buyout and win backing from a third-party investor. John Ritblat, chairman of British Land, one of Britain’s biggest property companies, has repeatedly expressed an interest in buying Merry Hill, the huge Chelsfield-owned retail centre in the West Midlands.
It is thought that Multiplex and Westfield are offering a 20% premium to the £404m of equity that financed the buyout. When it was taken private, Chelsfield had an enterprise value of £2 billion. Since then this has fallen to £1.6 billion due to disposals.