Bovis rejected the Redrow offer last week and one from Galliford Try over the weekend, saying: “Neither reflected the underlying value of the Bovis business.”
Redrow had proposed a share and cash transaction for Bovis, while Galliford Try had put forward an all-share transaction.
Redrow’s proposal was put to Bovis on 27 February and the cash and shares deal valued Bovis at 814p per share. It was rejected on 6 March. Redrow initially indicated it was not willing to improve its offer and as such Bovis said discussions were terminated.
However, in a statement this morning, Redrow did not rule out another proposal being put forward, although it seemed less positive about the possibility. It commented: “There can be no certainty that any offer will ultimately be made for Bovis.”
Discussing its rationale for the proposed merger, Redrow added: “The potential combination would offer a balanced geographical mix of revenue, including complimentary current land bank and forward land bank mix.”
Galliford Try’s proposal said that the equity in the combined group would be split 52.25% to Galliford Try and 47.75% to Bovis shareholders. This would have valued Bovis at £1.19bn, or 886p per share, representing a 7% premium on Friday’s closing price. However, in early trading this morning the shares eclipsed this offer price.
Directors at Galiiford Try said the merger had the potential to “create a new major house builder with national scale and geographic coverage through the combination of the 6th and 8th largest UK housebuilders by completions.”
Despite rejecting its initial offer, Bovis said: “Discussions with Galliford Try are ongoing.”
The merger proposals come at a difficult time for Bovis. Last month it reported a 3% drop in profit before tax for the year ending 31 December 2016, and said completion volumes for 2017 would be 10% to 15% below those of last year.
It has also faced criticism from disgruntled customers for handing over unfinished homes and in January David Ritchie stepped down from the role of chief executive officer.