Bovis Homes rejects Redrow and Galliford Try takeover bids

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Takeover talks with Galliford Try and Redrow have been rejected by housebuilder Bovis Homes as the firm tackles a series of challenges

Two major construction firms have had bids rejected to take over Bovis Homes.

The housebuilder has been in the spotlight recently due to ongoing problems with quality of its new builds. The housebuilder revealed it had put aside £7m towards compensation payments to consumers after some homes were found to be substandard.

Trouble at the housebuilder

In December chief executive David Richie left the firm after issuing a profit warning, and last month Bovis Homes announced it would focus on quality rather than quantity. The housebuilder warned this would impact its bottom line and revised its expected profit margin.

This has made the housebuilder a lucrative proposition for rival firms.

However, Bovis Homes said it had rejected bids from both Redrow and Galliford Try on value grounds.

Bids put forward by Galliford and Redrow

Galliford said it was still in talks and that the firm had made an all-share offer that would value Bovis Homes at £1.19bn. It proposed an equity split that would see 52.25 per cent go to Galliford shareholders and 47.75 per cent to Bovis’. The housebuilder said merging with Bovis could “create a new major housebuilder with national scale and geographic coverage”. Furthermore, a merger would deliver savings by combining “operational structures, sourcing and operating practices.”

Redrow’s offer was shot down after the housebuilder proposed an 814 pence per Bovis share, new Redrow shares, and a dividend payment. Bovis said it had pulled out of discussions because the firm was unwilling to improve this offer.

In a statement Bovis said: “The board also concluded that the Redrow proposal was not in the interests of Bovis shareholders as the cash element of the offer would require shareholders to crystallise value at the current Bovis valuation.”

It added: “In the meantime, the Board is making good progress with plans to recover and improve group profitability and enhance return on capital employed.

“The search for a new chief executive is also progressing well.

“The Board of Bovis remains committed to maximising returns to shareholders and will continue to consider all strategic alternatives.”

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