Taywood eyes up Chesterton

BUILDER Taylor Woodrow has pinpointed property services company Chesterton International as a takeover target. Taylor Woodrow's board, led by chief executive Keith Egerton and chairman Bob Hawley, met last week to consider ways of bolstering the group's 'facilities management' operations looking after other companies' properties.

Proposals for a bid for Chesterton are understood to have been on the agenda.

Taylor Woodrow's present contracts include looking after Shell petrol stations and Little Chef restaurants plus privately financed hospitals, and it is keen to expand this side of the business.

Chesterton is valued at £20.3m based on Friday's share price of 24p, which easily puts it within reach of Taylor Woodrow, valued at £936m. But a move by Taylor Woodrow could spark a bid battle for Chesterton, in which stock market-listed security services company Reliance Security has a 16%t stake.

Chesterton has built up its own operation looking after other companies' properties, Chesterton Workplace Management, to help insulate it from the boom and bust nature of its traditional estate agency, lettings and surveying businesses.

In its financial year to the end of June, Workplace Management contributed £1m towards Chesterton's profits of £2.3m and it ended the year with an order book worth £592m, including a contract to run Cable & Wireless's UK property portfolio.

Taylor Woodrow is one of Britain's biggest housebuilders after its £533m takeover of smaller rival Bryant this year. But it is interested only in Chesterton's facilities management business. Its other operations would be sold, possibly to management.

Chesterton's share price has slumped this year due to a downturn in the property market and the group issued a profits warning in June followed by cost-cutting. Chief executive Michael Holmes left in September and was replaced by Lorraine Baldry, formerly at investment bank Morgan Stanley.