Bellway Makes Public All-Share Bid for Crest Nicholson Following Rejection

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British homebuilder Bellway disclosed on Thursday that it had proposed an all-share bid last month to acquire Crest Nicholson, after the offer was rejected by its smaller rival. The potential deal, valued at approximately £650 million ($829.53 million), signals ongoing consolidation efforts in the UK’s homebuilding industry, which faces weak demand but is hopeful for a recovery.

Bellway’s bid would value Crest Nicholson at roughly 253 pence per share, based on Bellway’s closing share price on Thursday.

The UK homebuilding sector has witnessed significant mergers, including Barratt’s agreement to acquire Redrow and Vistry’s acquisition of Countryside in 2022.

Bellway highlighted the “compelling strategic and financial rationale” for the merger, emphasizing opportunities for long-term growth, a reduced risk profile, and sustainable shareholder returns.

Crest Nicholson issued a warning earlier in the day about at least a one-third drop in annual profit and reported an 88% decline in half-year earnings due to slowing demand.

Bellway recently raised its annual average selling price forecast, attributing strong trading to improved affordability and expected reductions in borrowing costs, which have bolstered customer confidence.

The UK faces a significant housing shortage, driving up the cost of homeownership and alienating younger voters who are struggling to transition from high rents to owning homes.

The competition regulator has urged builders and the government to address the housing shortage. Both the Labour and Conservative parties’ manifestoes are being closely watched for housing pledges ahead of the July elections.

Despite Crest Nicholson’s refusal to comment on the offer, the situation underscores the challenges and strategic maneuvers within the UK’s housing market as companies navigate economic pressures and evolving market dynamics.