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Bovis agrees ‘high-level terms’ to buy Galliford Try’s housebuilding divisions
The house builder Bovis Homes has agreed “high-level terms” to buy the two housebuilding businesses that are part of the construction group Galliford Try.
In a joint statement to the stock market this morning, Galliford Try and Bovis revealed that discussions were still at a “preliminary stage”, but if agreed the two businesses could be valued at more than £1bn.
In May Galliford Try rejected a bid from Bovis to buy Linden Homes, the house builder in the group, as well as its partnerships and regeneration division.
That bid was worth £950m, including a proposal to take on Galliford Try’s £100m private placement and issue Bovis shares to Galliford Try shareholders.
In the latest talks, Bovis said it expects the value of both businesses to be £1.075bn, made up of an issue of £675m worth of Bovis shares to Galliford Try shareholders, £300m cash and the taking on of the £100m private placement.
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Bovis also made clear that Galliford Try’s pension schemes would be transferred to Bovis Homes if the transaction was to be completed.
The two organisations are still in preliminary talks over the deal and said in a joint statement that “there remains significant work to be completed before definitive transaction documentation can be agreed, including agreement of detailed commercial terms, completion of due diligence and arranging transaction funding”.
According to the statement, both boards believe the deal would help Bovis compete more effectively in the UK housebuilding market and move into the partnerships and regeneration markets.
Bovis launched its own partnerships business earlier this year, aiming to strike deals with housing associations to develop land-led schemes.
Greg Fitzgerald, chief executive of Bovis Homes, said: “While discussions are still at early stages, this potential combination represents an exciting and transformational opportunity to create a leading UK house builder 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.”
If completed, the deal would leave Galliford Try with just its construction business.
Graham Prothero, chief executive of Galliford Try, said: “The transaction is an exciting opportunity to create two strategically focused businesses.
“The significant cash element within the consideration provides a firm foundation for our newly reorganised construction business to flourish as an independent company. The strong balance sheet and excellent fit between the combining businesses will be a superb platform for both private housebuilding and partnerships, creating a unique and well-positioned housing provider.”
