黑洞社区

Crest Nicholson has rejected two takeover offers from rival housebuilder Bellway in the last two months.

The pair revealed the double approach in statements to the stock market this morning and last night.

Bellway, which has a turnover of 拢3.4bn, made an offer to buy the entire share capital of its smaller rival 拢900m-turnover Crest Nicholson on 7 May.

Under the rejected 拢650m deal, Crest Nicholson shareholders would have received 0.093 shares in Bellway for each share they hold, with an implied value of 253 pence per share with a premium of around 18.8%. Crest Nicholson would have held 17% of the enlarged group鈥檚 share capital.

A Bellway spokesperson said 鈥淭he board of Bellway believes there is compelling strategic and financial rationale for a combination of Bellway and Crest Nicholson which would bring together the strength of each business with complementary brands鈥�

However, a Crest Nicholson spokesperson said the proposal 鈥渟ignificantly undervalued Crest Nicholson and its future standalone prospects and was not in the best interests of Crest Nicholson鈥檚 shareholders鈥�.

An earlier, lower offer from Bellway on 25 April to buy the share capital, with shareholders receiving 0.089 new shares, was also unanimously rejected by Crest Nicholson鈥檚 board.

Under Stock Market regulations, Bellway now has until 11 July to return with a new offer or withdraw from the takeover bid.

In a note, broker Investec said: 鈥淭he offer made for Crest Nicholson looks to be a sensible and opportunistic move by Bellway, in our view. The brands also look complementary, and greater scale and synergies should support higher margins.

鈥淐rest鈥檚 comments around its provisioning and its current land bank with its results [yesterday] should also provide more comfort around liability risk and the quality of the land bank from which to earn good margins and returns. We would not be surprised to see a revised offer be forthcoming.鈥�

News of the bids emerged a day after Crest Nicholson announced it made a 拢31m pre-tax loss in the six months to April, compared to a 拢28m profit the previous year. Revenue was also down 9% year-on-year to 拢257.5m. The figures have been impacted by Crest Nicholson discovering it needs to spend 拢31.4m to fix build defects.

>>See also: Barratt鈥檚 deal to buy Redrow for 拢2.5bn approved by both firms鈥� shareholders

Bellway, meanwhile, last week said it was 鈥渙n track鈥� to deliver 7,500 homes this financial year, with improved affordability having yielded a strong spring selling season. Bellway is one of eight housebuilders being probed by the Competition and Markets Authority over alleged 鈥渁nti-competitive behaviour鈥�

A merger of Bellway and Crest Nicholson would create a business with a turnover of around 拢4.3bn, which would make it the second largest according to 黑洞社区鈥檚 annual Top 50 Housebuilders ranking.