Housebuilder Bovis Homes has confirmed it is in ongoing talks with Galliford Try about a possible merger.
A tie-up between Galliford and Bovis would see the country’s 6th and 8th-biggest housebuilders by revenue combine to create a new company in the top five housebuilders by revenue.
Bovis confirmed that it had received merger proposals from both Galliford Try and Redrow but that both initial approaches had been rebuffed. It confirmed, however, that it was still talking to Galliford Try.
Bovis said: “The decision to reject the proposals was communicated to the two parties.
“Redrow subsequently indicated that it was not willing to improve the terms of its proposal and discussions were terminated. Discussions with Galliford Try are ongoing.”
Bovis said it had terminated discussions with Redrow after the firm indicated it was not willing to improve its offer.
“The board also concluded that the Redrow proposal was not in the interests of Bovis shareholders as the cash element of the offer would require shareholders to crystallise value at the current Bovis valuation,” the Bovis statement said.
It added: “In the meantime, 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.”
Galliford confirmed it was in talks over a possible purchase, saying it had made an offer that would value Bovis at £1.19bn. In a statement, Galliford said a merger could “create a new major house builder with national scale and geographic coverage”.
It has been a tough couple of months for Bovis. Last month it posted a fall in pretax profit from £160m to £154.7m for the year ending 31 December. It also announced it would be slowing the pace of building in 2017 after taking a £7m hit related to complaints about unfinished properties, including electrical and plumbing faults.
In January, Bovis chief executive David Ritchie departed after the company issued a profit warning over Christmas.
