黑洞社区

Wittingly or unwittingly, analysts believe Bovis effectively raised a 鈥渇or sale鈥� sign over itself when it issued a profit warning on 28 December last year.

Barely five weeks earlier in November, the group had issued a bullish trading update, with trading and profit for 2016 on course to deliver as expected. Its statement ended with an indication that it would provide a further update on 13 January; however no such statement materialised.

Instead, .

It is a reversal which highlights what industry-watchers believe to be the nub of Bovis鈥� current problems, namely that management took its eye off the ball in recent months. David Ritchie stepped down as the group鈥檚 chief executive in January 鈥� the search for a replacement continues 鈥� while there have been highly-publicised plumbing and electrical snags on some of its newly-built homes.

鈥淏ovis has been far too bullish,鈥� comments analyst Tony Williams of 黑洞社区 Value, 鈥渨hile at the same time it has suffered from serious quality control problems. Overall, management has lost its way.鈥�

Redrow鈥檚 offer is opportunistic. It was seeing if Bovis was desperate; its shareholders might be. While it鈥檚 not a foregone conclusion that Galliford Try will improve its offer, this is the more likely of the two

Kevin Cammack, Cenkos

On the offer front, Redrow鈥檚 is largely seen as opportunistic. Williams believes that of the two, 鈥渁n improved bid [from Redrow] is unlikely. It鈥檚 a deal that the market might like to see, but Redrow won鈥檛 want to pay [the equivalent of] 拢9 a share.鈥�

This view is shared by Kevin Cammack of Cenkos. 鈥淏ovis is a weak player in a robust industry. It鈥檚 vulnerable,鈥� he says. 鈥淏ut Redrow鈥檚 offer is opportunistic. It was seeing if Bovis was desperate; its shareholders might be. While it鈥檚 not a foregone conclusion that Galliford Try will improve its offer, this is the more likely of the two.鈥� A better bid certainly could arise out of discussions which the target company admits are ongoing.

Will the interest in Bovis flush out a 鈥榳hite knight鈥� bidder? 鈥淚t鈥檚 possible, but there won鈥檛 be a big queue when the price is at a premium to net asset value,鈥� Cammack says.

One thing is certain, says Williams: 鈥淏ovis will go. I suspect Galliford Try will sweeten their offer in the coming days or weeks, maybe by 10%. But a rival bidder 鈥� maybe Bellway will be tempted, maybe from China 鈥� is also a possibility.鈥�

A spokesman for Bovis said the group had experienced 鈥渨ell-documented problems. What was not so well-documented was the work that has subsequently been done to address them, including an extra emphasis on customer service, staff training and a slowing down of the build rate, all steered from the top by our interim chief executive鈥�.

Galliford Try鈥檚 current bid values Bovis鈥� shares at 886p each, or a total market capitalisation of 拢1,191m. Bovis鈥� shares were trading this morning at 896p, up 8% on last Friday鈥檚 close.

Galliford Try has until 9 April to announce a firm intention to make an offer for Bovis. What it wants is a recommended offer scenario. The ball, it seems, is in Galliford Try鈥檚 court.