Bovis sets sights on GT's £1.1bn housing businesses

Warren Lewis
11th September 2019
construction 665

Housebuilders, Bovis Homes and Galliford Try have reopened negotiations for the possible sale of GT’s housing businesses to Bovis.

The two housebuilders are looking to combine Bovis Homes and Galliford Try’s Linden Homes and Partnerships and Regeneration divisions. This would not constitute a merger of Bovis with GT, the companies said.

If the potential transaction goes ahead, it is expected to value the firms’ housing businesses at £1.075 billion.

This would see Bovis paying £300 million in cash to GT, the transfer to Bovis of GT’s £100 million debt placement, and the issue to GT shareholders of 0.57406 Bovis shares per GT share, equating to 63,739,385 Bovis Homes shares (in aggregate), which are valued at £675 million, based on Bovis’ closing share price on September 9 2019.

The boards of both housebuilders said the potential transaction would give Bovis “an enhanced housebuilding platform to compete more effectively in the UK housebuilding market,” and aid its move into the partnerships and regeneration markets, as well as provide it with a larger geographic footprint and strategic landbank.

The combination of the housing businesses would also generate “significant synergies and create substantial shareholder value.” GT’s board said the possible deal would allow GT to become a “well-capitalised standalone construction-focused group.”

If the transaction goes ahead, upon completion GT shareholders would own in aggregate approximately 29.3% of the enlarged Bovis.

Discussions were at an early stage, the housebuilders stressed, and final decisions were subject to considerations including the completion of satisfactory due diligence by both parties, and the raising of additional debt on terms Bovis finds acceptable.

Greg Fitzgerald, Bovis’ ceo, 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, well positioned to make the most of current opportunities and drive forward on our commitment to delivering high quality homes and excellent service that our customers and housing partners deserve."

Bovis also announced its half year results for the six months to June 30 2019, reporting a 20% rise in pre-tax profit to £72.4 million against H1 2018, with a 4% increase in total completions to 1,647.

The total average selling price of its homes rose 2% to £269,200. The private sales rate increased 15% to 0.6 per site per week “despite an uncertain market backdrop”.

Bovis said that during the period it saw further “strong improvement” in its customer satisfaction levels, with the group trending at a five-star HBF customer satisfaction score for the year to date.

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