Crest Nicholson looks set to merge with Bellway in a £720m takeover deal, after its management backed the latest proposal.
The merger between Crest and Bellway, which have turnovers of £780m and £1.25bn respectively, would create further consolidation in the housebuilding sector – with two other giants, Redrow and Barratt, also due to combine.
Crest Nicholson rebuffed a £650m takeover attempt from Bellway in June and said on Friday (5 July) that it was declining to engage in takeover negotiations with housebuilder Avant.
However, in a statement published on Wednesday (10 July), the housebuilder’s board said it would be “minded to recommend [the latest offer] unanimously to Crest Nicholson’s shareholders, should a firm intention to make an offer […] be announced”.
Bellway now has until 8 August to make a legally binding offer for Crest Nicholson or else desist in its takeover attempts.
Under the terms of the deal outlined on Wednesday, Crest Nicholson shareholders would receive 0.099 shares in Bellway for each share they own in the former. They would also receive a dividend of 4p per Crest Nicholson share.
The deal values Crest Nicholson at £720m, with its shares being valued at a premium of 28 per cent, based on the Crest and Bellway share prices on 13 June, before the latter’s first takeover offer.
In a statement the groups said: “The boards of Bellway and Crest Nicholson believe that there is compelling strategic and financial rationale for a combination of Bellway and Crest Nicholson.
“The revised proposal would bring together the strength of each business with complementary brands to reinforce Bellway’s position as a leading UK housebuilder, while enabling Crest Nicholson shareholders to benefit from the scale of the combined business.
“In addition, the board of Bellway believes a combination would deliver significant operational benefits (including procurement synergies) and the ability to open dual outlets on at least 10 current and future Crest Nicholson sites with complementary brands to drive incremental volumes at attractive margins.”
Two of the companies’ biggest rivals, Redrow and Barratt, are set to combine in a £2.5bn merger deal announced in February – pending sign-off from the Competitions and Market Authority.
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