Berkeley Homes, the English housebuilder, has rejected the proposal of a merger with its smaller rival Bovis, according to sources within the company. The all-share deal had been urged by the investment company Schroders, which is Bovis’s biggest shareholder.
Bovis’s recent troubles have made it a possible takeover target in the eyes of the market: late last year the company issued a profit warning, saying that profits would be flat this year due to a slowdown in building and sales. CEO David Ritchie then resigned abruptly and has not yet been replaced.
If Berkeley will confirm that it is not interested in a merger with Bovis other British housebuilders like Redrow or Persimmon could launch a takeover bid, making the most of the recent fall in Bovis's share price.
The last big deal in the British housebuilding sector was nearly ten years ago, when Taylor Woodrow and George Wimpey merged to form Taylor Wimpey, then the UK's biggest company in the sector.
British housebuilders have seen their profits and share prices increase and have expanded their plans, supported by government help-to-buy schemes and above all by strong demand and a chronic lack of supply, especially in the densely-populated South-East.
The UK property market has been resilient, despite the uncertainty over Brexit and its possible impact on house prices in the UK. The referendum result does not seem to have affected housebuilder Crest Nicholson, which on Tuesday announced a 27% rise in annual profits to £195m.
The dip in sales immediately following Brexit was short-lived, said chief executive Stephen Stone, and now the company is on track to increase the number of homes it builds by the end of the decade. ‘We remain committed to, and on track to deliver, our targets of 4,000 homes and £1.4 bn (€1.6 bn) of sales by 2019,' he said.
