Bovis Homes in merger talks

Even though Bovis Homes has had its problems in recent times it is still one of the U.K.’s leading housebuilders with a stock market valuation in excess of £1 billion. When the company announced a surprising profits warning towards the end of last year, leading to a reshuffle of the management, many began to think the company was at risk of a takeover. This weekend has seen news that rivals Galliford Try and Redrow have made offers for the company which would create a combined operation in excess of £2.5 billion. So, what does the future hold for Bovis Homes?

Days of independence are numbered

Even though the company has initially rebuked the merger offers from Galliford Try and Redrow it was interesting to see news that Bovis Homes is currently in talks with Galliford Try about an improved offer and Redrow is not yet out of the running. It does seem as though the company’s days of independence are numbered but then again combining two large housebuilding companies in the UK would create an even stronger company going forward.

We are likely to see a surge in the Bovis Homes share price when markets open on Monday and it will be interesting to see how this pans out. This move by Galliford Try and Redrow could flush out yet more bidders as the company has been very successful in years gone by.

Are UK housebuilders getting ready for Brexit?

At this moment in time nobody really knows how Brexit will impact the UK property market which has to a certain extent been supported by a weak currency which has attracted overseas investors. Therefore, perhaps it is no surprise to see some of the U.K.’s larger housebuilding companies looking to merge their operations thereby reducing their cost base and potentially increasing their profitability. A potential merger with Bovis Homes, with whoever may be successful, could just be the start of a significant round of corporate activity in the UK housebuilding sector.

There was some talk that Berkeley Group may consider an offer for Bovis Homes, having been approached by a major shareholder in Bovis, but this does not seem to have come to fruition. Whether the moves by Galliford Try and Redrow might flush out additional bidders remains to be seen.

UK property market

As we touched on above, the UK property market has remained fairly firm despite concerns about Brexit. Some experts are suggesting we have only scratched the surface of the potential issues as and when Article 50 is triggered but at this moment in time nobody really knows what the future holds. All we know at the moment is that the UK market is much stronger than many people had expected after the initial downward reaction to the Brexit vote last year.

News that some of the U.K.’s largest housebuilders are currently in talks about mergers and acquisitions would suggest there is value in this particular sector. Would larger merged entities in the UK housebuilding market mean more new builds in the short, medium and longer term? Time will tell………

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