黑洞社区

Gleeson made a statement to the stock exchange on Monday confirming that an approach had been made by an unnamed party outside the construction industry, and that it had been rejected.

The following day Castle confirmed that it was the mystery bidder and said it was offering about 383p a share 鈥� higher than the 345p indicated by Gleeson.

Castle, which was demerged from Lonrho Africa last year, is quoted on the alternative investment market and backed by an entrepreneur called Christopher Mills.

Mills is also chief investment officer at North Atlantic Fund, which has an 8% stake in Gleeson.

Castle was floated on the AIM in May, and said at the time that its main objective was 鈥渢o acquire either a publicly traded or a private company with attractive growth prospects and a sizeable UK workforce鈥�.

Castle鈥檚 statement made clear its hostile intentions. It said: 鈥淐astle is disappointed that the board of Gleeson decided formally to reject the possible offer without further exploring the potential benefits of its proposals. Accordingly, Castle intends to consult directly with Gleeson鈥檚 shareholders to establish whether or not a possible offer should be pursued.

鈥淐astle does not intend to withdraw its interest from a transaction the company believes to be in the best interest of the shareholders of both Castle and Gleeson, and regrets that Gleeson does not feel prepared to take discussions forward in a constructive manner.鈥�

The Gleeson family owns 30% of the shares and other staff own a further 10%.

It is understood that the Gleeson board rejected the bid because it was predominantly a paper offer, and it was not clear how Castle would raise funds for a cash offer.

A spokesperson for Castle said on Tuesday that it was a cash and shares offer. He would not elaborate on the exact split but said that the cash offer was 鈥渟ubstantial鈥�.

Castle intends to consult directly with Gleeson鈥檚 shareholders over an offer

Castle鈥檚 statement to the City

Castle said its offer was based on the closing prices of its own shares and those of Gleeson on 9 December, the last day of trading before it made its approach.

Castle submitted its indicative proposal to the Gleeson board on 12 December, after a meeting between Mills, Dermot Gleeson and Terry Massingham, Gleeson鈥檚 chief executive. Castle said its bid would have offered one new share in Castle for nine shares in Gleeson.

It added that, although its market capitalisation was only 拢5.4m, it held a pension surplus valued at 拢27.5m on 30 September 2004. The implication of this is that it would become an on-balance-sheet asset for Gleeson. That sum was inherited from Lonrho Africa鈥檚 pension fund.

Senior sources in the City said Gleeson was now likely to be a prime takeover target for other companies, both within the industry and among venture capitalists.

The appeal of the business lies in its regeneration arm and its large strategic landbank, which makes it attractive to housebuilders.

Commenting on the quoted construction sector, one City source said: 鈥淭he landscape is getting smaller, especially among the bigger players. Gleeson is ripe for takeover.鈥�

Gleeson sold its building division to a management team, led by Martin Smout, last August after it made a loss of 拢13.2尘.

Gleeson retained a small stake in that business and chairman Dermot Gleeson sits on its board, but its core business is now civil engineering and housebuilding in the UK.

Shares in the company rose 4% to 347.25p after Gleeson announced the offer on Monday, and rose a further 4% to 360.5p after Castle made its announcement late on Tuesday.

As 黑洞社区 went to press on Wednesday afternoon, Gleeson was expected to make a trading update at its annual general meeting.