Redrow has walked away from buying Bovis Homes after deciding not to increase its takeover approach, clearing the field for rival housebuilder Galliford Try.
Bovis, which is under pressure following severe criticism over the quality of its homes, a shock profit warning and the departure of its chief executive, confirmed on 12 March that it had received takeover approaches from Redrow and Galliford.
The company said at the time that its board had decided to reject both offers because “neither reflected the underlying value of the Bovis business”. Talks with Redrow, which proposed a cash and share deal, were terminated, while discussions with Galliford, which proposed an all-share merger at 886p a share, carried on.
Bovis’s share price has struggled since the Brexit vote last June. Other housebuilders have recovered more quickly.
Its shares fell 1.6% to 859p in early trading on Tuesday after Redrow put out a statement saying: “Following additional analysis, the board of Redrow has determined that it is not in its shareholders’ best interests to increase its proposal to Bovis above the level that was rejected by the board of Bovis. Given this, Redrow confirms that it does not intend to make an offer for Bovis.”
Galliford has argued that its housebuilding division, Linden Homes, would complement Bovis and give the combined company a strong presence in the south of England. Galliford also has a regeneration arm and a construction business that installed the retractable roof over Centre Court at Wimbledon.
Bovis has had a difficult few months and will spend £7m on repairing poorly built homes, after angry customers set up a Facebook group and accused the company of pressuring them to move in to unfinished homes so it could hit sales targets.
The interim chief executive Earl Sibley, who took the helm after David Ritchie left in January, has put the brakes on the company’s production rates.
