Bellway PLC (LSE:BWY) and Crest Nicholson Holdings PLC each moved into the red after their bid deadline passed and was extended for a firm agreement over their merger on Thursday.
Bellway had originally been granted until Thursday afternoon to table a firm offer for Crest Nicholson, with the deadline for an agreement now being pushed to August 20.
According to a joint statement, the terms of their possible agreement would see Crest Nicholson's investors receive 0.099 Bellway shares and a 4p dividend per share.
“Good progress has been made on reciprocal due diligence with a number of elements satisfactorily completed by both parties,” the statement read.
However, further time was agreed with regulators for discussions and for each to continue conducting respective due diligence, the companies added.
Extended negotiations between the two comes after Bellway approached Crest Nicholson with a revised £700 million takeover offer in June and as Barratt Developments PLC (LSE:BDEV) and Redrow PLC (LSE:RDW) look to tie up their merger deal.
A competition probe into the latter published on Thursday found just one area of concern out of 400-plus sites, with Barratt and Redrow being given until August 15 to suggest remedies.
Both prospective agreements also come after optimism has risen around the housing sector following the Labour government’s election victory in July.
Alongside proposals to loosen planning rules in the sector, Keir Starmer’s government has pledged to build 1.5 million new homes in the UK over the next five years.
Bellway fell 1.9% on Thursday following the update, while Crest Nicholson slipped 1.6%.