Redrow abandons pursuit of rival housebuilder Bovis
Housebuilder Redrow has pulled out of the takeover tussle for under-pressure rival Bovis Homes, saying it would not return with a higher offer.
Redrow said it was giving up its pursuit because it had decided it was “not in its shareholders’ best interests to increase its proposal” after its initial approach was rebuffed by Bovis just over two weeks ago.
Flintshire-based Redrow had been competing against rival suitor Galliford Try, whose initial all-share proposal was also snubbed by Bovis.
But Bovis has remained in talks with Galliford Try.
Redrow said that, following its move to withdraw from the bidding battle, it would focus instead on its “highly successful” growth strategy.
It added: “Redrow’s strong land bank and disciplined approach to its operations means it is well-placed to both continue to grow its profits and progressively increase dividend payout.”
Kent-based Bovis saw its chief executive quit in January after warning over profits following its failure to build enough homes on time.
It was rocked by customer complaints over the poor quality of its homes, which were sold unfinished and were plagued by electrical and plumbing faults.
The firm announced in February that annual pre-tax profits were down 3% to £154.7 million, as it set aside £7 million to cover remedial work and compensation for affected customers and revealed a raft of measures to improve the service.
Its share price has also tumbled since Britain voted to leave the European Union, making it vulnerable to a takeover tilt from a competitor.
If talks with Galliford Try are successful, a takeover would create one Britain’s biggest housebuilders capable of producing of 7,000 homes a year, with a combined market capitalisation of £2.4 billion.
Galliford Try said earlier this month that a tie-up would deliver “significant” cost savings by combining their “operational structures, sourcing and operating practices”.
Its initial offer provided a 7% premium on Bovis’s closing share price on March 10 this year and would hand Galliford Try and and Bovis shareholders 52.25% and 47.75% of the combined business respectively.