Shares in Crest Nicholson rose yesterday after revealing it had rejected two takeover bids from rival Bellway.
The struggling Surrey housebuilder confirmed it had rejected the bids – the second of which was worth £650m – because it is “confident” in its future as an independent business.
Crest Nicholson shares rose 13.7 percent on investors’ hopes that its biggest competitor will return to the table with a more favorable deal.
It came as Martyn Clark took over as chief executive yesterday, replacing Peter Truscott.
Clark joined a day after the developer issued its fifth profit warning in less than a year, sending shares down more than 11 percent. Annual profits are expected to be between £22m and £29m, down from previous forecasts of £39m.
‘Confident’: Crest Nicholson shares rose 13.7 percent on investors’ hopes its biggest competitor will return to the table with a more favorable deal
Russ Mould, investment director at brokerage AJ Bell, said: ‘Crest Nicholson’s profit warning made miserable reading, so its investors could welcome a good offer premium to dig them out of a hole. “The next step is to do mergers and acquisitions (mergers and acquisitions) until we reach an agreement.”
Interactive Investor’s Victoria Scholar said the share price reflects “the fact that investors expect Bellway to return with another improved offering.” A partnership would be the latest consolidation between the housebuilders after Barratt agreed to buy Redrow for £2.5bn. Legal & General also revealed this week that it has put Cala Homes up for sale.
High interest rates have raised mortgage costs, leading to lower demand for new homes. Therefore, promoters seek to grow by buying other companies.
