Retirement homebuilder in massive buy-out?

Earlier this month retirement home builder McCarthy & Stone revealed in a statement to the stock exchange that it had received approaches that "may or may not result in an offer for the company."

Now it appears the billionaire Reuben brothers have emerged as the frontrunners to buy the retirement homes group for £1billion.

Permira, the private equity firm, is also understood to have approached McCarthy and is being advised by Citigroup on its advances. The Times of London reported that investment firm Augusta Capital hopes to push aside private-equity group Permira with the record-breaking bid for the firm.

If the deal is successful, it will beat the previous largest house building takeover - the £634 million acquisition of Westbury by Persimmon.

It is believed that Augusta is working in partnership with HBOS, the bank, on the deal.

Keith Lovelock, McCarthy & Stone's chairman, is thought to have provided information about the company's finances to both Permira and Augusta Capital, the Telegraph reported.

McCarthy builds about 60% of retirement homes in Britain and is seen as an increasingly attractive business because Britain's ageing population boosts demand for retirement homes.