Bidder takes case to Gleeson investors

Christopher Mills, the high-profile activist investor, will reveal details of his strategic plan for MJ Gleeson to shareholders this week, after its board rejected his unsolicited, £197m takeover bid.

The plan, unveiled to the housebuilder's directors last month, is thought to include a sale of its underperforming divisions.

Advisers to Castle Acquisitions, the AIM-listed vehicle which made the bid, will meet some of Gleeson's largest institutional shareholders tomorrow.

One of these has urged Gleeson's board to hold further talks with Castle, claiming it had broken off discussions with the bidding vehicle too soon.

Gleeson said on Monday that it had rejected an "outline proposal" from an unnamed party. This was followed by a statement from Castle, which said the decision had been made without further consultation and even though more meetings were scheduled last week.

Mr Mills denied claims from Gleeson that Castle had called off the talks. He added that when he described the strategic plan to the Gleeson board last month, its chairman, Dermot Gleeson, had called it "sensible". Other directors are understood to have been opposed to the plan, under which the company would retain its housebuilding and regeneration divisions, which are performing well. Some of its services and PFI divisions could be sold instead.

Castle is also threatening to launch a proxy fight. If that happens, it could seek investor support to replace hostile directors with those favouring a takeover.

Castle was spun out of Lonrho Africa, taking the hotel group's pension surplus of £27.5m. The vehicle would inject the surplus into Gleeson's pension fund.

Members of the Gleeson family own around 30 per cent of the housebuilder, which was founded in 1903.