30/04/1998

Chesterton abandons deal with Summit

FINANCIAL TIMES 30/04/98 P.24 By Norma Cohen, Property Correspondent

……………………………………….. Chesterton International, the property consultancy and management group, has shelved plans for a reverse takeover by Summit Group following extensive due diligence.

In February, Chesterton’s shares were suspected at 36p, following news of the preliminary agreement which would have created an entity with a combined value of £70m. Summit shareholders would have held 60 per cent of the enlarged equity.

Chesterton said: “The benefits of the merger were not as great as had originally been anticipated and accordingly the merger discussions have been terminated.”

Summit, which has net assets of £42.6m, is a property services and asset management company. More than 50 per cent of its equity is held by venture capital investor Electra Fleming, the General Electric Pension Fund and GEC. In October, Chesterton announced losses of £7m for the year to June 30, and said it would technically have been insolvent had it not been for the forbearance of its banks.

Yesterday, Michael Holmes, chief executive of Chesterton, said that although the company was disappointed “we shall continue the progress we have made over recent months and are confident of building on our good half-year results”.

Kit Hunter Gordon, managing director of Summit, said: “On close analysis of the Chesterton Group, Summit’s board concluded that Chesterton’s business would not form the appropriate platform from which to build Summit’s business services strategy”.