Struggling housebuilder Crest Nicholson has rejected a £650m takeover offer from rival Bellway.
The details came just hours after Crest, which is based in Surrey, issued a profit warning that sent its shares tumbling.
Newcastle-based Bellway said there was a “compelling strategic and financial justification” for an alliance with Crest.
A deal would be the latest consolidation in the sector after Barratt agreed to buy rival Redrow for £2.5bn.
And it comes a day after life insurance giant Legal & General revealed it had put its Cala Homes division, the UK’s tenth largest housebuilder, up for sale.
Election uncertainty: Mortgage rates have been volatile due to changing expectations about when the Bank of England would cut its benchmark 5.25% interest rate.
Bellway made its offer on May 7 and said the approach was rejected.
Its valuation was at a 30 percent premium to Crest Nicholson’s share price at the time the offer was made, Bellway said.
The disclosure of the offer came after the close of business last night.
Crest shares had fallen 11.6 per cent, or 28p, to 212.8p, valuing it at just £547m after its profit warning.
The stock will be in the spotlight again today after the offering was revealed.
Crest said yesterday that demand had weakened amid “volatility” in mortgage rates and that the general election had created “short-term uncertainty”.
Annual profits are now expected to be between £22m and £29m, below previous market expectations of £39m.
The update came as a survey by the Royal Institution of Chartered Surveyors showed the UK’s housing recovery appeared to have “reversed”.