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Housebuilders in talks

Galliford Try puts case for £1.2bn Bovis deal

BovisGalliford Try has today confirmed that it has approached the board of Bovis with a proposed £1.2 billion all-share merger.

In a statement it said it has a “strong future” and its five-year organic growth strategy, recently presented to the market, was well received by investors.

“The directors are confident in and committed to the delivery of this strategy, but believe that it could be enhanced and accelerated by this proposed merger, given its potential to:

 ·     Create a new major housebuilder with national scale and geographic coverage through the combination of the 6th and 8th largest UK housebuilders by completions.

·     Allow Bovis shareholders to share in the strong growth potential of Galliford Try, including benefitting from its leading position in affordable housing and regeneration.

·     Deliver significant synergies through the optimisation of the combined group’s operational structures, sourcing and operating practices.

·     Create value for both Galliford Try and Bovis shareholders by delivering material improvement in key operating metrics. 

Under the proposed merger Galliford Try shareholders would hold 52.25% of the equity with Bovis investors holding the remaining 47.75%.

On the basis of the share price of Galliford Try at close of business on 10 March this would value the entire issued equity of Bovis at £1.191 billion or 886p per share, representing a 7% premium to the closing share price of Bovis on the same date.

Under Galliford Try’s proposal, Galliford Try shareholders would receive the Galliford Try interim dividend announced on 21 February to be paid on 6 April, and Bovis shareholders would receive the Bovis recommended final dividend announced on 20 February and payable on 19 May.

Galliford Try owns the Scottish construction firm Morrison.

It was reported at the weekend that Bovis has rejected an approach from Galliford Try, and a rival approach from Redrow.

Bovis, whose CEO quit in January following a profit warning, said last month it would slow down construction this year and focus on improving the quality of its homes after complaints from some buyers.

Bovis said it had terminated discussions with Redrow after the firm indicated it was not willing to improve its offer.

“The board also concluded that the Redrow proposal was not in the interests of Bovis shareholders as the cash element of the offer would require shareholders to crystallise value at the current Bovis valuation,” it said in a statement.


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