House builder Bovis has penned a more than £1 billion deal for Galliford Try’s residential home building business, it said this morning, bringing together both chief executives under the same roof again.
The deal will bring together parts of two of Britain’s biggest home builders, both listed on the FTSE 250, the UK’s second tier index.
It was first floated by both boards in September as house builders face increasing pressure in an uncertain market in the run-up to Brexit.
Thursday’s announcement confirmed reports in the Sunday Times that Galliford chief executive Graham Prothero would join up with his old boss Greg Fitzgerald, the chief executive of Bovis who held the same role at Galliford until 2015.
Mr Prothero will become chief operating officer, the companies confirmed. Mr Fitzgerald and finance director Earl Sibley will stay in their roles.
“The combination with Galliford Try Partnerships gives Bovis Homes a market-leading position in the high growth, more resilient partnerships market, with significant potential to increase revenue and profit while delivering more affordable homes at a time when they are needed more than ever,” Mr Fitzgerald said.
Bovis said it will pay almost £1.1 billion for Galliford’s Linden Homes and Partnerships and Regeneration businesses, partly through shares and cash. The deal will give Galliford shareholders almost a third of the shares in Bovis Homes, valued at £675 million.
Bovis will also go to existing shareholders to ask for up to £157 million more to help fund the deal, and will take a £100 million loan.
The new group will immediately jump into the top five house builders in the country, delivering more than 12,000 homes every year in future. This, both Bovis and Galliford hope, will help them compete better against the bigger players.
They also hope that by combining forces they can cut £35 million in costs in the second year after the deal has been completed.
If shareholders approve the deal in early December, it will be completed in the first few days of next year, the company said.