Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to the newest version of your browser.

Your browser appears to have cookies disabled. For the best experience of Construction News, please enable cookies in your browser.

Welcome to the Construction News site. As we have relaunched, you will have to sign in once now and agree for us to use cookies, so you won't need to log in each time you visit our site.
Learn more

City Site - Hopes high for prosperous New Year


THE BANK of England may be growing concerned about the growth of lending to property and construction companies. But, as the year closes, there seems to be no shortage of faith in the sector's prospects among the larger companies themselves.

Indeed, December has seen a flurry of corporate activity in the sector, with contractors, house builders and materials firms all taking advantage of deal opportunities.

Morgan Sindall's £3 million acquisition this week of three of Benson's construction divisions, which were in administration, may be modest in group terms but it underlines the quoted group's growing confidence. It was reinforced by an upbeat trading statement showing the order book has risen by 10 per cent in the second half to £1.7 billion, prompting some analysts to raise their profit forecasts for the firm.

Among the house builders, an offer to rival the planned management-led bid may be in the pipeline for Countryside Properties, where an investment vehicle, Rock Pacific, has acquired a holding equivalent to 28.1 per cent.

Unless the housing market changes dramatically, more bid interest in medium-sized quoted house builders is expected to surface in the New Year.Yet, despite tougher trading conditions, key players in the sector, notably Berkeley and McCarthy & Stone, are sufficiently confident in their prospects to be returning cash to shareholders and buying back shares.

Meanwhile, the materials sector is attracting bid interest. Novar, the building systems and aluminium extrusions group, seems likely to be bought by Honeywell International after it unveiled an £815 million cash bid, well above Aim-listed Melrose's offer. And last week's acquisition by Low & Bonar of LCM Construction Products (maker of concrete additive Adfil)for up to £12.8 million will broaden its mix and contribute to earnings from the first year.

None of these deals mark any significant restructurings but most are based (house building excepted) on expectations of continued growth and a positive business climate across the industry next year.