Financial Mail sparks takeover probe

CITY regulators have contacted Taylor Woodrow and Chesterton International after Financial Mail's report that the housebuilder had highlighted the property services company as a takeover target.

The London Stock Exchange and the Takeover Panel approached the companies after Chesterton's share price jumped 20% the day after the report was published last month. They were asked whether they needed to make a Stock Exchange announcement to clarify the position. Both declined.

Chesterton said it did not know about Taylor Woodrow's potential interest. It has targeted Chesterton for its facilities management arm, which runs other companies' properties and services. Taylor Woodrow's own contracts include looking after Shell petrol stations and Little Chef restaurants. Through a takeover of Chesterton, valued at £23 million, Taylor Woodrow would own Chesterton Workplace Management and then sell off its other operations, including the estate agency.

There has been no contact between the two companies. Chesterton's new chief executive, Lorraine Baldry, who joined last week, plans to spend the next few months visiting the company's offices and formulating its strategy. Taylor Woodrow, one of Britain's biggest housebuilders, last week unveiled former Bass Brewers boss Iain Napier as its new chief executive.

Security services company Reliance Security has a 16% stake in Chesterton and is also believed to be watching the situation closely.

Chesterton's share price fell steadily last year and it issued a profits warning in June.