Bovis Homes set to take on housebuilding giants Barratt and Persimmon

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Bovis Homes set to take on housebuilding giants Barratt and Persimmon as it inks billion pound deal for Galliford Try’s housing business

  • Bovis has splashed out over £1bn for Galliford Try’s residential homes business
  • Idea first floated in September as housebuilders face increasing pressure
  • Rival Persimmon announced results today, with its  sales falling by 6 per cent

By This Is Money and Press Association

Published: | Updated:

Housebuilder Bovis Homes has penned a more than £1billion deal for Galliford Try’s residential building business, it said this morning.

The deal will bring together parts of two of Britain’s biggest builders, both listed on the FTSE 250, the UK’s second tier index.

It was first floated as an idea by both boards in September as housebuilders faced increasing pressure in an uncertain market in the run-up to Brexit.

A builder works at one of Bovis Homes’ housing developments 

Thursday’s announcement confirmed reports in the Sunday Times that Galliford chief executive Graham Prothero would join up with his old boss Greg Fitzgerald, the chief executive of Bovis who held the same role at Galliford until 2015.

Mr Prothero will become chief operating officer, the companies confirmed. Mr Fitzgerald and finance director Earl Sibley will stay in their roles.

PERSIMMON SALES FALL 6 PER CENT

Bovis rival Persimmon has said its plan to put customers ahead of volume ate into the number of homes it sold over the last six months.

Sales of new homes fell 6 per cent in the first half of the financial year, it revealed on Thursday. This was in large part down to a new policy of only selling homes to customers when they were closer to being fully built, said chief executive Dave Jenkinson.

Over the six months the number of sales it completed fell to 7,584 homes. It expects a similar effect in the second half of the year, although it is likely to sell more as the market is more active in autumn and winter. 

It said the practice of forward selling – flogging a home well in advance of customers getting the keys – had fallen to around £950million beyond 2019. This was a drop of £37million from the same period last year.

It has bought 3,700 new plots of land in the period, spending more than £170million.

Persimmon said its broadband packages, launched in the second half of last year, have attracted 3,350 customers.

‘The combination with Galliford Try Partnerships gives Bovis Homes a market-leading position in the high growth, more resilient partnerships market, with significant potential to increase revenue and profit while delivering more affordable homes at a time when they are needed more than ever,’ Mr Fitzgerald said.

Bovis said it will pay almost £1.1 billion for Galliford’s Linden Homes and Partnerships and Regeneration businesses, partly through shares and cash. The deal will give Galliford shareholders almost a third of the shares in Bovis Homes, valued at £675million.

Bovis will also go to existing shareholders to ask for up to £157million more to help fund the deal, and will take a £100million loan.

The new group will immediately jump into the top five housebuilders in the country, delivering more than 12,000 homes every year in future. This, both Bovis and Galliford hope, will help them compete better against the bigger players.

They also hope that by combining forces they can cut £35million in costs in the second year after the deal has been completed.

If shareholders approve the deal in early December, it will be completed in the first few days of next year, the company said.

 

 

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