7th Nov 2019 08:35
(Alliance News) - Galliford Try PLC and Bovis Homes PLC have finally agreed a deal for Bovis to takeover the two Galliford housebuilding business units, the two announced on Thursday.
The agreement comes after Galliford in May rejected a GBP1.05 billion bid from rival Bovis for its Linden Homes and Partnerships & Regeneration businesses.
However, in September the two confirmed they had resumed talks. Bovis was to issue shares worth GBP675 million and pay GBP300 million in cash, and also take on GBP100 million of Galliford debt.
The terms announced on Thursday will see Bovis issue 63.8 million new shares to Galliford, valued at GBP675 million, pay GBP300 million in cash, and take over Galliford's GBP100 million 10-year private debt placement, meaning the terms are unchanged from September's announcement.
Bovis is to fund the cash part with a new GBP100 million term loan, existing resources, as well as a fundraise announced Thursday which will see it place 13.5 million shares for GBP157 million. This implies a placing price of approximately 1,165 pence per share.
Bovis was 0.2% higher in early trade on Thursday at 1,165.00p, and Galliford was 1.8% higher at 720.00p.
The transaction values the two Galliford businesses at a combined GBP1.14 billion, and gives Galliford a 29% stake in the expanded Bovis group. It leaves Galliford with its construction business.
"This transaction is a positive development which is in the best interests of both our shareholders and wider stakeholder group. For Galliford Try, it establishes a focused and well-capitalised construction business led by a very experienced and dedicated management team. Supported by a robust order book and strong market positions in key sectors, Galliford Try will be well positioned for the future," said Galliford Chair Peter Ventress.
"This transaction also creates one of the UK's leading Housebuilding and Partnerships businesses with great opportunity ahead, from which Galliford Try shareholders will benefit through their continued shareholding."
Greg Fitzgerald, the chief executive of Bovis, added: "This is an exciting and transformational opportunity to create a leading UK housebuilder with an enhanced customer proposition and the ability to increase delivery to more than 12,000 new homes per year.
"The combination with Galliford Try Partnerships gives Bovis Homes a market leading position in the high growth, more resilient partnerships market, with significant potential to increase revenue and profit while delivering more affordable homes at a time when they are needed more than ever."
Bovis also said it will, instead of paying a previously announced GBP60 million special dividend, carry out a "bonus issue" of 5.7 million shares to existing shareholders. It will pay a dividend of 41p in May, instead of a final dividend for 2019.
By George Collard; [email protected]
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