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Sat November 28 2020

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McCarthy & Stone board backs US private equity takeover

23 Oct The board of McCarthy & Stone is recommending that shareholders accept a £630m takeover bid from a private equity investment firm.

US investment firm Lone Star is keen to invest in the UK retirement living sector; McCarthy & Stone specialises in building retirement housing and has more recently moved into managing later living developments.

Bidco, a wholly-owned indirect subsidiary of Lone Star Real Estate Fund VI, is offering shareholders of McCarthy & Stone 115 pence per share, which represents a 38.6% premium to yesterday’s closing price of 83 pence and a 57.9% premium to the six-month average price of 72.8 pence.

McCarthy & Stone directors unanimously intend to recommend that shareholders vote in favour, believing that it is a better way to access the capital needed to deliver on their development plans.

Paul Lester, chairman of McCarthy & Stone, said: "The McCarthy & Stone directors believe that the offer from Lone Star represents fair value for shareholders and unanimously intends to recommend the offer. The all-cash offer represents a compelling and attractive opportunity for shareholders to realise and crystallise their investment in McCarthy & Stone in the near term and also provides a meaningful premium to the prevailing share price notwithstanding the backdrop of the wider risks posed by the political and macro-economic environment.

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“We believe that Lone Star would provide a complementary partner for McCarthy & Stone's stakeholders and along with the investment in the business that Lone Star can provide, will enable further improvements of its transformation strategy and allow McCarthy & Stone to capitalise on its growing rental and multi-tenure offering which would underpin the long-term growth of McCarthy & Stone."

Donald Quintin, president of Lone Star Europe, said: "As a leading developer and manager of retirement communities in the UK, McCarthy & Stone represents an attractive opportunity in a market underpinned by clear fundamentals: a rapidly ageing population and a structural undersupply of suitable housing options for older people.

“Lone Star shares the McCarthy & Stone management team's vision for growth. With our proven experience in developing property-related businesses, we believe our partnership will enable McCarthy & Stone to accelerate its transformation, which aligns with the government's goal of increasing the supply of attractive housing options in the UK. We look forward to partnering with McCarthy & Stone's management and employees to further support the company's ongoing transformation."

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