Bovis to Acquire Rival’s Housing Units in $1.4 Billion Deal

(Bloomberg) -- Bovis Homes Group Plc has agreed to buy Galliford Try Plc’s housing division in a 1.075 billion-pound ($1.4 billion) deal that combines shares, cash and debt.

The deal values Galliford’s housing business Linden Homes at 975 million pounds, plus 100 million pounds of notes, according to a statement from the company Thursday. Talks have been ongoing since September, with the announcement capping a long-running courtship between the two firms.

Discussions broke down earlier in the year when Galliford rejected a bid that valued the units at 950 million pounds, excluding debt. In 2017, it was Bovis that rebuffed the advances of Galliford, ending merger talks and hiring Greg Fitzgerald as its CEO. Fitzgerald headed Uxbridge, Middlesex-based Galliford for 10 years, a company he joined as a teenager, before leaving in 2015.

“This is an exciting and transformational opportunity to create a leading U.K. housebuilder with an enhanced customer proposition and the ability to increase delivery to more than 12,000 new homes per year,” Fitzgerald said in the statement.

The combination will help bolster Bovis in the event of a downturn, with the construction of homes for affordable housing providers less susceptible to booms and busts, Fitzgerald said in a phone interview. The deal will also extend Bovis’s geographic reach into new regions in the U.K.

“This gives Bovis a leading position in the high-growth, more-resilient partnerships and regeneration market,” Fitzgerald said. “This diversification we believe decreases risk and enhances our earnings visibility.”

The merger will see Galliford Try shareholders receive a 29.3% stake in the enlarged firm, according to the statement. Bovis will part-finance the cash portion of the deal with a share placing that expects to raise as much as 157 million pounds.

Supported by cheap borrowing, a ready supply of land and government incentives, the environment for the country’s housebuilders remains benign. That may change, however, with uncertainty surrounding the departure of the U.K. from the European Union that could bring higher costs of labor and materials and weaker consumer confidence.

To contact the reporter on this story: Lucca de Paoli in London at gdepaoli1@bloomberg.net

To contact the editors responsible for this story: Shelley Robinson at ssmith118@bloomberg.net, Chris Bourke

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