Shares in Bovis Homes soared today as the troubled housebuilder remained locked in a takeover tussle that could transform it into a £2.4 billion business.
The FTSE 250 company saw its shares jump about 10 per cent on the London Stock Exchange as the market digested a flurry of weekend announcements, confirming that rivals Galliford Try and Redrow had made offers for the firm.
Bovis confirmed othat it had rebuffed a share and cash deal from Redrow and snubbed an all-share transaction from Galliford Try.
However, talks with Galliford Try continue and, if successful, would create one Britain’s biggest housebuilders capable of producing of 7,000 homes a year, with a combined market capitalisation of £2.4bn.
Bovis said: “The board of Bovis reviewed the proposals and concluded that neither reflected the underlying value of the Bovis business and therefore both should be rejected.
“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. Redrow subsequently indicated that it was not willing to improve the terms of its proposal and discussions were terminated. Discussions with Galliford Try are ongoing.”
Galliford Try said a tie-up would deliver “significant” cost savings by combining their “operational structures, sourcing and operating practices”.
Its initial offer provided a 7 per cent premium on Bovis’s closing share price on Friday and would hand Galliford Try shareholders 52.25 per cent of the combined business.
Bovis said the board was making “good progress” with plans to shore up profitability and its search for a chief executive was “progressing well”.
The Kent-based group has seen its share price sink more than 12 per cent since the UK voted to leave the European Union, making it vulnerable to a takeover tilt from a competitor.
Its financial performance was rocked by customer complaints over the poor quality of its homes that were sold unfinished and were plagued by electrical and plumbing faults.
The firm announced last month that annual pre-tax profits were down 3 per cent to £154.7 million, as it set aside £7m to cover remedial work and compensation for affected customers and revealed a raft of measures to improve the service.
Charlie Campbell, analyst at Liberum, said: “Neither proposer is desperate to do this deal as land is readily available in the open market, but there is scope to improve operating margins at Bovis significantly. We still think there could be other potential buyers.”
Campbell said construction groups, such as Skanska, may also consider a swoop for Bovis in the coming days.
Galliford Try’s offer valued Bovis at 886p per share, while Redrow’s offer was worth 814p.