Bovis and Galliford Try have agreed a £1.1bn deal for the sale of Galliford Try’s Linden Homes and its partnership & regeneration businesses to Bovis Homes.
The terms are much the same as initially set out in September, £1.075bn in cash and shares, and shareholders of each company will vote on the deal next month.
In a note to shareholders, the Galliford Try board believes the proposed deal will:
- Allow Galliford Try to realise an appropriate premium for the housing businesses;
- Result in Galliford Try shareholders having investments in two focused and well-financed businesses, through their continuing 100% shareholding in Galliford Try, and a 29.3% shareholding in the enlarged Bovis Homes;
- Create, through the enlarged Bovis Homes, one of the UK's leading housebuilding businesses; and
- Transform Galliford Try into a well-capitalised, stand-alone construction-focused group.
Meanwhile, the Bovis Homes board believes the proposed deal will achieve estimated recurring run-rate pre-tax cost synergies of at least £35m per annum by the end of the second full financial year following completion.
Peter Ventress, chairman of Galliford Try plc, said: "This transaction is a positive development which is in the best interests of both our shareholders and wider stakeholder group. For Galliford Try, it establishes a focused and well-capitalised construction business led by a very experienced and dedicated management team. Supported by a robust order book and strong market positions in key sectors, Galliford Try will be well positioned for the future. This transaction also creates one of the UK's leading housebuilding and partnerships businesses with great opportunity ahead, from which Galliford Try shareholders will benefit through their continued shareholding."
As part of the deal, current Galliford Try chief executive Graham Prothero, has been offered, and apparently accepted, the job of chief operating officer of the enlarged Bovis Homes group.
Prothero was only appointed as Galliford Try chief executive in March, and a strategic review in April resulted in 350 job cuts announced in May, after the company decided to shrink its construction arm by nearly a third.
Greg Fitzgerald and Earl Sibley, currently the chief executive and group finance director respectively of Bovis Homes, will retain their positions, while key Galliford Try staff Andrew Hammond, chief executive of Linden Homes, and Stephen Teagle, chief executive of partnerships & regeneration, will both join Bovis Homes on completion of the deal.
The proposed deal is subject to the approval of both firms' shareholders next month, and will take effect after close of trading at the London Stock Exchange on 2 January 2020.