Housebuilder Bellway PLC (LSE:BWY) has closed out the week confirming press speculation that it made an offer for Crest Nicholson PLC (LSE:CRST), the fellow home construction company whose shares sunk more than 11% yesterday on the back of poor results.
Bellway said it made an offer on May 7 but Crest Nicholson's board rejected it.
Under the terms of the offer, Bellway had promised to give Crest Nicholson shareholders 0.093 shares in the former for every share owned in the latter, representing an implied value of 253p per CN share.
Had the deal been approved, Crest Nicholson shareholders would have held 17.1% of the entire Bellway share capital, with the offer for each share representing a 30% premium at the time when it was made and a 20.5% premium to the Chertsey firm's three-month average of 210p.
Shares closed on Thursday at just under 213p.
Bellway's board justified the move by claiming it would create significant synergies, strengthen each business, reduce both risk profiles and lead to lower indebtedness.
Crest Nicholson's board said after deliberating on the offer, they "concluded that it significantly undervalued Crest Nicholson and its future standalone prospects and was not in the best interests of Crest Nicholson's shareholders."
"Crest Nicholson remains confident in its standalone prospects, in particular... the review of provisions for completed development sites supported by external consultants, its highly attractive land portfolio and the new leadership of Martyn Clark," a statement said.