Galliford Try has agreed “high-level” terms with Bovis to sell its Linden Homes and partnership & regeneration businesses to the housebuilder in a deal worth £1.08bn.
Both companies released identical statements to the stock market this morning outlining the terms of a potential deal.
Galliford Try would remain as a listed contracting business with its shareholders receiving 0.57 Bovis Homes shares per Galliford Try share, which would have a total value of around £675m.
The contractor would also receive £300m in cash from Bovis while the housebuilder would take on £100m of Galliford’s debt.
Bovis will raise the £300m through a rights issue and by raising additional debt.
Galliford Try chief executive Graham Prothero said the deal would leave his company as a much stronger contracting business.
“The significant cash element within the consideration provides a firm foundation for our newly reorganised construction business to flourish as an independent company,” he said.
Bovis Homes CEO, and former Galliford Try boss, Greg Fitzgerald said the deal would turn his company into a “UK-leading housebuilder” thanks to its greater size.
Linden Homes builds around 6,000 homes a year while Bovis builds around 4,000 a year.
Galliford Try’s share price jumped 27 per cent when the market opened before falling back to around 15 per cent. Bovis was down around 5 per cent in early trading.
Due diligence will need to carried out by both companies and Bovis must get approval for raising new debt and placing new shares to fund the deal.
If final terms can be agreed, then the deal will have to be approved by the shareholders of both businesses.
Bovis also reported record pre-tax profit of £72.4m in its half-year results for the six months to the end of June published this morning.
Galliford Try is due to publish its full-year results for the year ending 30 June tomorrow.
In May, the board of Galliford Try rebuffed a £950m all-share offer from Bovis for its Linden Homes and partnership & regeneration businesses.
In 2017, Galliford Try attempted to buy Bovis for around £1.19bn.
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