Reubens Lead in Mccarthy & Stone Auction

11 June 2006 – Sunday Telegraph

The billionaire Reuben brothers have emerged as the frontrunners to buy McCarthy & Stone, the retirement homes group, for £1bn.

It is understood that Augusta Capital, the investment firm backed by Simon and David Reuben and headed by co–founder Jacob Lyons, is in talks to buy the housebuilder. It is believed that Augusta is working in partnership with HBOS, the bank, on the deal.

Permira, the private equity firm, is also understood to have approached McCarthy and is being advised by Citigroup on its advances. Keith Lovelock, McCarthy & Stone’s chairman, is thought to have provided information about the company’s finances to both Permira and Augusta Capital.

On June 2 McCarthy & Stone revealed in a statement to the stock exchange that it had received approaches that “may or may not result in an offer for the company”. Its share price leapt by 15 per cent on the news. The shares closed on Friday at 864p, valuing the business at £887m.

McCarthy has been seen as an increasingly attractive business because Britain’s ageing population boosts demand for retirement homes. The company is the largest provider of private retirement homes and flats in the UK, with 120 locations. Most of its homes consist of one or two bedrooms.

The sector has notoriously high barriers to entry, meaning that the business is likely to attract a significant premium.

Although it has a strong market share, McCarthy & Stone saw its profits fall by 20 per cent in the six months to February.

Three years ago John Mc-Carthy, the company’s founder and then chairman, attempted to delist the group, but his approach was rejected and he proceeded to sell his 13 per cent stake. A row then erupted over £190,000 of share options.

Augusta Capital is being advised by NM Rothschild; McCarthy & Stone is advised by UBS.