The boards of Bovis Homes Group and Galliford Try announce that the two firms have re-engaged in preliminary discussions regarding a potential ‘combination’ deal.
The speculative deal first came to light in 2017, and in a statement released earlier today, the two housing developers confirmed that early dialogue eas taking place outlining the terms of a speculative deal.
Despite the deal, both Bovis & Galliford stress that this is not a merger, but a deal that would see the firms and their respective divisions deliver an “enhanced housebuilding platform”.
Commenting on the Potential Transaction, Greg Fitzgerald, CEO of Bovis Homes said: “While discussions are still at early stages, this potential combination represents an exciting and transformational opportunity to create a leading UK housebuilder with enhanced scale, well-positioned to make the most of current opportunities and drive forward on our commitment to delivering high-quality homes and excellent service that our customers and housing partners deserve. We know that we only succeed as a business if we succeed for them.
Galliford Try’s Partnerships business is a fantastic brand, with a very strong position in the UK. Combining it with Bovis Homes’ newly launched Partnerships Housing Division would enable us to become the partner of choice for delivering more affordable homes at a time when these are needed the most.
Based on my familiarity with the businesses and the compelling strategic rationale, I think this is a massive opportunity, and as a substantial shareholder of Bovis Homes, my intention is to subscribe to the placing if the transaction proceeds.”
If successful, the two firms’ housing businesses will be valued at £1.075 billion, which includes the transfer to Bovis Homes of Galliford Try’s 10-year debt private placement of £100 million.
The rationale given for the deal talks is that the move will help “accelerate” Bovis Homes’ move into the higher growth partnerships and regeneration markets. In addition, the deal would generate significant synergies and create substantial shareholder value for the respective board members.
Commenting on the benefits of the Potential Transaction for Galliford Try, Graham Prothero, CEO of Galliford Try said: “The transaction is an exciting opportunity to create two strategically focused businesses. The significant cash element within the consideration provides a firm foundation for our newly reorganised Construction business to flourish as an independent company. The strong balance sheet and excellent fit between the combining businesses will be a superb platform for both private housebuilding and partnerships, creating a unique and well-positioned housing provider.
Much remains to be done before we can present the detailed proposal to our shareholders and wider stakeholders. However, if completed, we are confident this deal will generate significant value for shareholders and a bright future for all three of our businesses.”