Lone Star to buy UK developer Quintain for €986m

US private equity giant Lone Star is to buy UK developer Quintain Estates and Development in a deal which values the London-based firm at around £700 mln (€986 mln).

Dallas-based Lone Star has offered to pay 131 pence a share in cash for Quintain, around 22% more than Tuesday’s closing price.

London-listed Quintain said in a statement on Wednesday that its directors will recommend the offer to shareholders unanimously.

'The proposed acquisition represents a unique opportunity for Lone Star to gain further exposure to residential and commercial assets in London,' said Angus Dodd of Lone Star Europe Acquisitions LLP.

Quintain has refocused its business on London in recent years, developing the Wembley Park residential and retail project near England’s national soccer stadium.

Commenting on the Offer, Maxwell James, CEO of Quintain, said: 'Since 2012, Quintain has undergone a major transformation which has seen the business dispose of non-core assets, progressively rebalance the business to focus on London and materially de-gear the balance sheet, creating a strong platform for growth.'

The takeover will be carried out by Bidco, an investment vehicle indirectly controlled by Lone Star Real Estate Fund IV. It will be financed by funds provided by Lone Star Real Estate Fund IV and debt from third parties.

'The offer from Bidco crystallises value for shareholders at an early stage whilst enabling Quintain’s vision for Wembley Park to be accelerated through the addition of significant financial resources, creating more mainstream homes in the capital more quickly than would otherwise be possible,' James said.

Quintain is being advised on the takeover by JP Morgan Cazenove and Lazard. Morgan Stanley is acting for Lone Star.

Quintain was established in 1992 and listed on the London Stock Exchange in 1996. At 31 March 2015, the company had real estate assets with a combined value of £834.6 mln, including a core investment portfolio valued at £366 mln and a core development portfolio valued at £396 mln. Assets at Wembley Park comprise 80% of Quintain’s portfolio.