黑洞社区

A roadside cafe was the setting for merger talks between Peter Redfern and Ian Smith, chief executives of Wimpey and Taylor Woodrow respectively. The conversation proved fruitful: last week the companies told the London stock exchange that they had struck a 拢5bn deal that will form the UK鈥檚 biggest housebuilder.

However, with Persimmon considering its own bid for Taylor Woodrow, the two parties will have to work quickly and effectively to complete the deal. Then the massive work of merging cultures and staff begins.

But the Taylor Wimpey deal, if it succeeds, is just the latest in a series of major mergers and takeovers in the housebuilding sector in the past 15 months. Here, 黑洞社区 takes a behind-the-scenes look at how some of these unfolded and the problems the parties encountered along the way. They may provide clues as to what Wimpey and Taylor Woodrow will have to do to complete their merger 鈥� and the pitfalls that might be in store.

Barratt and Wilson Bowden

Deal Barratt pays 拢2.2bn
Date Continuing, but the board recommended Barratt鈥檚 offer in February
Redundancies Unknown
Significant leavers Wilson Bowden chief executive Ian Robertson will leave and the Wilson family will give up its 37.7% stake
Potential cost savings 拢45m a year

Off the record Even five years ago Wilson Bowden鈥檚 management team knew that David Wilson, the chairman of the company and head of the family that owned more than a third of the business, was keen to sell. Last July, news of the latest review of his stakeholding was leaked to the press.

It was through the newspapers, then, that staff discovered that they could soon have new bosses. Managers confirmed the story in an email to employees, but merger rules held them back from revealing more details.

There was a fear that Wilson Bowden could lose staff, but because the company was in the second half of its year, many were less than six months away from their bonuses, a definite incentive to hang on.

Between November last year and February this year, Wilson Bowden effectively interviewed interested parties. 鈥淲e managed to dictate the process,鈥� says a Wilson Bowden insider. 鈥淚t was friendly, not hostile. In various formats we met the parties six to 12 times.鈥�

Financial negotiations were thrashed out by advisers, with the chief executives, Barratt鈥檚 Mark Clare and Wilson Bowden鈥檚 Ian Robertson, discussing landbanks and structural changes rather than price and terms.

Although the deal is pretty well done, Wilson Bowden and Barratt cannot bid together for development land. Equally, it is difficult for one of the parties to pull out of a land sale, as this would look as if they were colluding.

Another problem with the lack of a formal conclusion to the deal is that staff don鈥檛 know whether or not their jobs are safe. As a result, managers fear that some Wilson Bowden employees are polishing their CVs. Directors know at least some of the people who will stay in their posts, but because they cannot tell them yet, there is a chance the company will lose them. It鈥檚 known, for example, that one of the companies鈥� head offices will have to close, although it might still be used as a regional office.

One person who is definitely going is Robertson. It is understood he will leave shortly after the deal is completed.

Persimmon and Westbury

Deal Persimmon pays 拢643m
Date January 2006
Redundancies One-third of Westbury鈥檚 staff 鈥� about 500 people
Significant leavers Chief executive Nigel Fee and four non-executive directors, all in January 2006
Potential cost savings 拢45m over two years

Off the record Rumours had circulated for 18 months that Persimmon fancied a bit of Westbury. The company waited and waited, striking when it felt Westbury was at its weakest 鈥� Persimmon is understood to have made its approach on 2 November 2005, the day after chief executive Martin Donohue left the company.

John White, Persimmon鈥檚 chief executive, and Duncan Davidson, its chairman, often saw Donohue at trade shows, but they never spoke to him about their interest in his company. It had been a difficult 18 months for the target, as Westbury was finding it hard to attract vital staff. 鈥淚t was difficult recruiting people into key positions,鈥� says a Westbury source. 鈥淎pplicants would be fearful that they鈥檇 take the job, and then Persimmon would come in and make them redundant.鈥�

Persimmon calculated that Donohue, the chief executive for 10 years, was too entrenched in the company to consider takeover talks. Although his successor, Nigel Fee, had been deputy chief executive, he was 鈥渁n unknown quantity鈥� according to the source, and probably more amenable to making a deal.

In the end Fee played a harder game than Persimmon had expected and it was forced to raise its offer from 540p a share to 560p.

Galliford Try and Linden Homes

Deal Galliford Try pays 拢109m
Date March this year
Redundancies Six out of a staff of 350
Significant leavers Chief executive Philip Davies
Potential cost savings 拢2.5m a year

Off the record The Linden sale was always on the cards. Directors had owned 65% of the business since it went private in 2000, and the plan was for them to make a return on this investment within five to seven years.

Philip Davies, Linden鈥檚 chief executive, started taking a serious look at the possibility of selling about two years ago, and in March last year held a 鈥渂eauty parade鈥�, according to a company source, of seven institutions that could market the business. Linden chose NM Rothschild & Sons which ran the first round of bidding after the summer; 30 businesses showed an interest.

Between five and 10 submitted further bids in November. Not being a listed company, Linden was not compelled to select purely on price. This meant it could ensure that staff were protected 鈥� hence only six redundancies: 鈥淲e looked at the future of the business,鈥� says one director. 鈥淔ortunately the best price and the best promise of continuity for Linden both came from Galliford Try.鈥�

Greg Fitzgerald, the Galliford Try chief executive, met Davies about six times to seal the deal, and they were able to work quickly together, having known each other for four years through joint-venture company FRL.

The fear was that staff would leave, knowing that the company was being touted. Directors offered key employees bonuses to stay put while the deal was going through. Ultimately, the only people to leave were Davies 鈥� although he is assisting with the integration of the business part-time 鈥� two of his assistants, and three employees at the Surrey head office.

Two venture capitalist deals

Deal HBOS/West Coast Capital pays 拢1.1bn for McCarthy & Stone
Date October 2006
Redundancies None
Significant leavers Keith Lovelock, chairman, and Matthew Thorne, finance director
Potential cost savings None. The consortium wants McCarthy & Stone鈥檚 revenue stream, which is virtually guaranteed as it is the main player in a specialist market: retirement homes.

Deal HBOS and West Coast Capital pocket Crest Nicholson for 拢715m
Date Continuing, but last month the board said it was minded to recommend the offer
Redundancies Likely to be announced a week before the deal is completed, probably in April
Significant leavers Unknown, but a strong directors鈥� presence at Mipim suggests that the management team will stay in place
Potential cost savings Unknown, as yet.