Bovis Homes Group plc (LON:BVS) has rejected takeover offers from Galliford Try plc (LON:GFRD) and Redrow plc (LON:RDW), saying neither reflected the underlying value of the housebuilder.
The company said in a statement yesterday it was continuing talks with Galliford Try but discussions with Redrow were over after it indicated it was not willing to improve the terms of its proposal.
Redrow approached Bovis on 27 February with a proposed share and cash deal. The offer was worth the equivalent of 814p per Bovis share out of cash, Redrow shares and dividend payments ,Redrow said.
“The board of Bovis informed Redrow on 6 March 2017 that the proposal did not merit further discussion,” Redrow said in a statement.
“Redrow continues to believe the potential combination offers a compelling opportunity to create a combined business with the scale and operational strength to compete more effectively in the growing UK housebuilding market.”
Galliford Try proposed an all-share offer at a 7% premium on Bovis’ share price at close on Friday, offering 886p per share.
Both companies have until 5.00pm on 9 April to announce a firm intention to make a bid, or they will have to walk away.
The takeover bids come amid troubled-times for Bovis. Its share price has underperformed the rest of the sector since last June’s Brexit vote. Bovis chief executive David Ritchie stepped down in January after the company issued a profit warning over the Christmas period, telling investors it would complete about 180 fewer homes than expected for the year. Bovis also came under fire last month after saying it was paying £7mln to repair poorly built new homes.
In yesterday’s statement, Bovis said the board is “making good progress with plans to recover and improve group profitability and enhance return on capital employed”.
“The search for a new chief executive is also progressing well.”
Liberum left its rating on the stock at 'hold' but raised its target price to 886p from 757p to reflect the possibility of a merger.
"Neither proposer is desperate to do this deal as land is readily available in the open market, but there is scope to improve operating margins at Bovis significantly," Liberum said.
"We still think there could be other potential buyers."
Shares jumped 6.88% to 885p in early trading.
-- Adds broker comment, updates share price --