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Galliford Try and Bovis in merger talks

Bovis Homes is in talks with Galliford Try over a possible merger after a fortnight of intense activity.

The housebuilder confirmed in an update to the Stock Exchange today that it had rebuffed two approaches, one share and cash offer from Redrow and one all-share offer from Galliford Try.

The Bovis board decided that neither offer reflected the underlying value of the company.

Discussions with Redrow were “terminated”, Bovis said, but discussions were ongoing with Galliford Try.

Galliford Try confirmed that it had made an offer and said it believed the merger could “enhance and accelerate” its five-year growth plan.

The company’s offer valued Bovis at £8.86 per share – based on Friday’s share prices – and would see Bovis take a 47.75 per cent stake in the new company, and Galliford Try a 52.25 per cent.

Galliford Try said the merger would see a new major national housebuilder created with a wide geographic coverage.

The merger between Bovis, the UK’s eighth biggest housebuilder by revenue, and Galliford Try, the sixth biggest, would put the new company in the country’s top five housebuilders by revenue.

Galliford Try now has until 9 April to make a formal offer for Bovis or withdraw from its pursuit.

Redrow confirmed that it made an offer on the 27 February valuing Bovis at £8.14 per share but this had been rejected on 6 March.

Redrow’s offer would have seen Bovis handed a 32.4 per cent stake in the new company.

Bovis said: “The Redrow proposal was not in the interests of Bovis shareholders as the cash element of the offer would require shareholders to crystallise value at the current Bovis valuation.”

Last month, Bovis posted a fall in pre-tax profit from £160m to £154.7m for the year ending 31 December. The firm said it was cutting back on housing completions in 2017 in the wake of quality issues.

Bovis Homes chief executive David Ritchie quit the company in January – a fortnight after the housebuilder issued a profit warning.

Interim chief executive Earl Sibley said in February it would be “a number of months” before a new chief executive was named

Bovis shares jumped by eight per cent immediately following the update this morning.

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