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Bovis targets Galliford's housing arm with improved bid

Bovis targets Galliford's housing arm with improved bid
FILE PHOTO: A builder works at a Bovis homes housing development near Bolton, Britain, July 9, 2008. REUTERS/Phil Noble -
Phil Noble(Reuters)
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By Shashwat Awasthi and Noor Zainab Hussain

(Reuters) – Britain’s Galliford Try <GFRD.L> has restarted talks to sell its residential housing businesses to Bovis Homes after receiving an improved cash and shares proposal worth 1.08 billion pounds.

The talks come amid a slowdown in Britain’s housing market, partly due to uncertainty caused by the country’s departure from the European Union.

Bovis <BVS.L> has thrived in the slowing market, thanks to a focus on affordable homes. A deal would allow Galliford, meanwhile, to concentrate on turning round its other construction interests.

Earlier this year, Bovis was in talks to buy Galliford’s Linden Homes and Partnerships & Regeneration divisions for 950 million pounds in shares and the assumption of 100 million pounds in debt, but discussions ended after Galliford said they were not in its shareholders’ interests.

Galliford shares surged more than a quarter in value to a six-month high of 780 pence in early Tuesday trading. Bovis’s shares fell about 4%.

Under the new proposal, Galliford shareholders would get 0.57406 Bovis shares for each Galliford share they own, implying a value of 675 million pounds, and Galliford would also be paid 300 million pounds in cash.

Bovis said it would fund the cash part of the deal from an equity placing, additional debt and existing resources.

Galliford shareholders would own about 29.3% of the enlarged Bovis, while Bovis would also take on Galliford’s 10-year debt worth 100 million pounds.

Galliford’s pension schemes would transfer to Bovis as well.

Bovis said significant work was still needed before a definitive deal could be signed, including agreeing on commercial terms, due diligence and arranging funds.

Bovis also reported a 20% rise in profit for the six months ended June 30 to 72.4 million pounds, adding it had not seen any significant change in customer behaviour ahead of Brexit.

Galliford, which has reduced its exposure to Central London where the housing market slowdown has been most marked, is best known for construction projects ranging from the redevelopment of the Wimbledon tennis venue to hospitals and city bypasses.

(Reporting by Shashwat Awasthi in Bengaluru; Editing by Arun Koyyur and Mark Potter)

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