Bellway increases offer for Crest Nicholson to £720m

Newcastle-based housebuilder Bellway plc has made a higher all-share approach to buy smaller rival Crest Nicholson Holdings Plc worth about £720 million.

Bellway now has until August 8 to make a concrete offer.

Crest Nicholson had rejected an earlier £650 million approach from Bellway and has also rejected a rival proposal from Avant Homes, the housebuilder controlled by the New York hedge fund Elliott.

On Wednesday, Crest Nicholson said Bellway had increased its bid to 273p a share — a premium of 28.3 % to Crest Nicholson’s closing share price on June 13, the day before the talks were revealed.

Under the terms of this latest possible offer, Crest Nicholson’s shareholders would receive 0.099 shares in Bellway for each share they own in Crest Nicholson and a dividend of 4p per Crest Nicholson share.

Crest Nicholson’s shareholders would hold 18% of the enlarged group.

The board of Crest Nicholson has confirmed to Bellway that the revised proposal is at a value that it would be “minded to recommend unanimously to Crest Nicholson’s shareholders” should a firm intention to make an offer be announced.

The boards of Bellway and Crest Nicholson said they believe “there is compelling strategic and financial rationale for a combination of Bellway and Crest Nicholson.”

They said: “The Revised Proposal would bring together the strength of each business with complementary brands to reinforce Bellway’s position as a leading UK housebuilder, while enabling Crest Nicholson shareholders to benefit from the scale of the combined business.

“In addition, the board of Bellway believes a combination would deliver significant operational benefits (including procurement synergies) and the ability to open dual outlets on at least 10 current and future Crest Nicholson sites with complementary brands to drive incremental volumes at attractive margins.

“As part of the combination the board of Bellway intends to retain and deploy the Crest Nicholson brand across the enlarged group (including on Bellway sites) …

“There can be no certainty that a firm offer will ultimately be made for Crest Nicholson by Bellway, even if the pre-conditions are satisfied or waived …”