McCarthy & Stone founder quits

JOHN McCarthy, the chairman and joint founder of Britain's biggest retirement homes builder McCarthy & Stone, has quit the company less than a month after his family buyout proposal was rejected by fellow directors.

McCarthy, non-executive chairman and a director of the company, agreed to resign his positions following talks with directors over recent days.

Chief executive Keith Lovelock has assumed the role of executive chairman, effective immediately.

McCarthy had wanted to buy out the company he co-founded in 1963, and intended to merge the business with Churchill Retirement Living, a rival homebuilder owned by his sons.

But the independent directors rejected McCarthy's bid, saying it did not reflect the true value of the company. It is believed it wanted an offer in the region of 580p a share, which would value the business at close to £600m.

Lovelock said today he believed the move was in the best interest of McCarthy & Stone as it prepares to review its entire board structure.

'It was felt that it was the right thing for John McCarthy and it was the right thing for the company,' Lovelock said. 'Because of the offer, we thought it was appropriate to sever the relationship with him.'

McCarthy's position as chairman had become increasingly untenable in the wake of the failed bid attempt and the subsequent gloomy forecasts he made about the state of the British housing market.

In June analysts began revising their consensus earnings forecasts for McCarthy & Stone from £98.5m to around £100m after the company predicted it would exceed market expectations. But when McCarthy abandoned his bid on 12 July, he shocked the market by suggesting the UK housing market was weakening and homebuilders were in for tough times. Many saw it as sour grapes.

The decision to sever ties raises questions about the future of McCarthy's stake in the company. He is the largest shareholder with 13.45m shares - nearly 13% - but has given no indication that he intends to sell out. 'That is entirely John McCarthy's decision,' Lovelock said.

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