Bovis in fresh talks with Galliford Try over £1.1bn housebuilding tie-up
Bovis said the talks are still at an early stage and stressed there remains ‘significant work to be completed’.
Bovis Homes has rekindled talks to buy rival Galliford Try’s housebuilding arm in a deal valuing the division at £1.1 billion.
Bovis has agreed basic terms on a deal to buy Galliford’s Linden Homes and Partnerships & Regeneration units, sending shares in Galliford 10% higher, having soared as much as 27% at one stage.
Bovis shares slipped 4%.
But Bovis said the talks to combine Bovis Homes and are still at an early stage, with “significant work to be completed” before a deal can be agreed.
The pair also stressed the deal was not a full merger of the two companies, with Galliford remaining a separately listed construction-focused firm.
It marks the second attempt at a deal between the firms this year after Galliford Try rejected a £950 million approach in May – £1.05 billion including debt – and comes two years after full merger talks between the two housebuilders collapsed.
Galliford attempted to acquire Bovis but talks broke down after the pair failed to agree on a valuation.
Bovis boss Greg Fitzgerald – a former chief executive of Galliford Try for nearly a decade – said he believed it was a “massive opportunity”.
He said: “While discussions are still at early stages, this potential combination represents an exciting and transformational opportunity to create a leading UK housebuilder with enhanced scale.”
He added: “Galliford Try’s Partnerships business is a fantastic brand, with a very strong position in the UK.
“Combining it with Bovis Homes’ newly launched Partnerships Housing Division would enable us to become the partner of choice for delivering more affordable homes at a time when these are needed the most.”
The potential deal would see Bovis pay Galliford £300 million in cash, award shares worth £675 million to Galliford investors and take on £100 million worth of debt.
Bovis would also take on Galliford’s pension schemes.
Following completion of the proposed deal, Galliford shareholders would own around 29.3% of the enlarged Bovis Homes group.
The deal would bring together two of the UK’s top 10 housebuilders, although Bovis is by far the larger of the two.
While the deal is just £25 million higher than the original deal earlier this year, analysts said Bovis has “sweetened” the deal with the £300 million cash element.
Graham Prothero, chief executive of Galliford Try, said the cash boost would provide a “firm foundation for our newly reorganised construction business to flourish as an independent company”.
Details of the proposed tie-up came as Bovis also reported half-year figures showing pre-tax profits rose by a fifth to a record £72.4 million as house sales lifted 4% to 1,647.
Neil Wilson, chief market analyst at Markets.com, said the deal “marks a big shift from when the embattled Bovis faced down a takeover bid from Galliford.
“Shares in Bovis have risen over 20% since those opportunistic offers from Galliford and Redrow were rebuffed. And for Bovis CEO Greg Fitzgerald, it marks something of a coming home after 30 odd years at Galliford.”
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