UK housebuilder Redrow has not given up its pursuit of crisis-hit rival Bovis Homes, despite the company rejecting an initial offer while continuing talks with fellow builder Galliford Try.
Bovis said over the weekend it had turned down an initial offer from both Redrow and Galliford Try. It remained in further discussions with Galliford, but said Redrow had “indicated that it was not willing to improve the terms of its proposal and discussions were terminated”.
However, in a statement on Monday, Redrow said it was still keen to reach a deal. It said there can be no certainty that it will make a further offer, but added:
Redrow continues to believe the potential combination offers a compelling opportunity to create a combined business with the scale and operational strength to compete more effectively in the growing UK housebuilding market.
The potential combination would offer a balanced geographic mix of revenue, including a complementary current land bank and forward land bank mix. Given that the proposal is largely in the form of Redrow shares, Bovis shareholders would be able to share, alongside existing Redrow shareholders, in the proven value creation skills of the Redrow management team.
Redrow’s initial cash and share offer had a total value of £8.14 per Bovis share, with Bovis shareholders offered 32.4 per cent of a combined group.
Bovis said in a statement 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.”
Galliford Try confirmed on Monday it had proposed a merger valuing Bovis at £8.86 per share, with Bovis shareholders to control 47.75 per cent of a combined group.
Bovis has been the subject of takeover speculation for some time, after it struggled to meet production targets and suffered a sharp drop in its share price while the wider property sector has remained resilient.
Chief executive David Ritchie resigned in January shortly after the company issued a profit warning, and it is currently being led by finance director Early Sibley.
The company said on Monday it is “making good progress with plans to recover and improve group profitability” and its search for a new chief executive, but said it “will continue to consider all strategic alternatives”.