Hedge fund makes pitch for Quintain

In a move that could derail the takeover of the property group, which is developing large tracts of land in Wembley, west London, Elliott Capital Advisers has taken control of nearly 68 million shares using a controversial contracts-for-difference arrangement, reports The Times.

Elliott’s position is equivalent to a 12.9 per cent holding in Quintain and was secured at 130½p to 131½p a share.

A contract for difference is a method of taking control of shares, and their voting rights, without paying their full price. The investor takes a contract to buy the shares over a given period and if the shares rise they may make a profit — but they also can lose heavily.

Elliott, which is best known for its boardroom assault on Alliance Trust, did not disclose its intentions, but said that it “believes that the offer substantially undervalues the company and confirms that it did not accept the [Lone Star] offer”.

Lone Star, a US private equity fund, struck a recommended £700 million deal in July to acquire Quintain at 131p a share, a move designed to cash in on London’s residential property market. Quintain is developing thousands of homes in Wembley and if the deal completes Lone Star would have access to a large area of undeveloped land around the national football stadium.

However, Lone Star requires 75 per cent in acceptances from Quintain shareholders to delist the company and complete the takeover. It has secured nearly 72 per cent but has had to extend the offer period a number of times.

Yesterday, it extended the offer for another seven days until September 30, but analysts said that there were concerns that Elliott’s late intervention could scupper the takeover.

Some shareholders said they were worried that the full value of the Wembley site was not reflected in Lone Star’s offer. Others said that they could not understand why William Rucker, the chairman of Quintain and the UK chief executive of Lazard, which is advising on the takeover, or the company’s board did not run an auction.

Lone Star’s offer represents a near 8 per cent premium to Quintain’s net asset value. Quintain has also traded at a heavy discount to net asset value for some time and has been a takeover target for years.
Lone Star and Quintain declined to comment.