Taylor Woodrow vulnerable to Persimmon takeover following poor sales in Florida and Californian high-rise operations

Taylor Woodrow鈥檚 vulnerability to a takeover by Persimmon grew this week after it revealed that its American operations had taken a 拢41.6m hit.

Taywood, which is planning a 拢5bn merger with George Wimpey, announced this week that poor sales in its high-rise divisions in Florida and California had cost it 拢25m.

The firm has also made a 拢16.6m provision in relation to a legal dispute in Florida, which may drag on until 2009.

Taywood said it would suspend selling at its high-rise tower division in Florida until market conditions improved. Ian Smith, the chief executive, said the outlook for this year remained in line with expectations, excluding exceptional items, thanks to the firm鈥檚 strong UK performance.

Ian Smith
Once upon a time in America: Smith (pictured) and Taywood would suspend some activities in Florida.

The timing of the news may make it easier for Persimmon to launch a bid. Taywood鈥檚 share price dropped 1.3% to 480p after the announcement on Wednesday, before rising again to 500p later in the day.

Persimmon, which has a long track record of acquisitions, has been placed under pressure to expand by Barratt Homes鈥� 拢2.2bn acquisition of Wilson Bowden.

One analyst said: 鈥淭his development increases Taylor Woodrow鈥檚 vulnerability if Persimmon wants to make a move. Commercially, it is highly tenable. In terms of the merger, you don鈥檛 want any bad news right now. Although it is not wholly unexpected, it鈥檚 not helpful.鈥�

Persimmon has been expected to wait for merger documents to be issued by Taywood and Wimpey before issuing any bid. Smith said these would be issued today.

Persimmon would not comment on whether it was preparing a bid.