Crest Nicholson Holdings PLC on Friday said it rejected a revised all-share offer from Bellway PLC.
The Surrey, England-based property developer received an initial all-share offer on April 25 that would have seen Crest investors receive 0.089 new ordinary shares in Bellway. This proposal was rejected on May 2.
A revised offer put forward on May 7 increased the offer to 0.093 shares in Bellway for each Crest share, which would have left Crest shareholders with approximately 17% of the combined entity. This was rejected on May 14.
Based on the Bellway share price of 2,718.00 pence as at close Thursday, the revised proposal valued Crest shares at 253.00p each, representing a premium of approximately 19%.
Bellway commented: ‘there is compelling strategic and financial rationale for a combination of Bellway and Crest Nicholson which would bring together the strength of each business with complementary brands to reinforce Bellway’s position as a leading UK housebuilder.’
However, after evaluating the revised proposal with financial advisers, the board of Crest rejected the offer having concluded that the offer ‘significantly undervalued’ the company and its future stand alone prospects.
The company affirmed its confidence in its ‘highly attractive land portfolio,’ and the leadership of Chief Executive Officer Martyn Clark who joined the firm in January from Persimmon PLC.
Crest Nicholson shares were up 7.6% to 229.00 pence each in London on Friday morning, Bellway shares were down 3.2% to 2,630.00 pence each.
On Thursday, Crest Nicholson reported a £30.9 million pretax loss for the six months to April 30, swung from a £28.4 million profit a year before. Its basic loss per share was 9.1 pence, compared with 8.2p.
Revenue decreased 8.9% to £257.5 million from £282.7 million, as home completions decreased 12% to 788 from 894.
Crest Nicholson said the spring selling season started well but that momentum has softened since.
‘Momentum has softened slightly since Easter, reflecting the volatility in mortgage rates and the expectation of a base rate reduction coming later in the year than previously expected. The imminent general election is creating some short-term uncertainty, but this is anticipated to be alleviated in July once the outcome is known,’ the company said.
As a result, financial 2024 adjusted pretax profit is forecast to be between £22 million to £29 million.
Broker Peel Hunt pointed out this was well below the current market consensus of around £40 million.
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