Crest Nicholson shares surged higher on Friday after the housebuilder announced it had received a bod from rival Bellway.
Just a day after Crest Nicholson took an axe to its dividend and profit forecast, sending shares sharply lower, its peer Bellway has announced an approach to potentially acquire a struggling competitor amid a broad market downturn.
In a move to strengthen its position in the UK housing market, Bellway made a non-binding all-share offer to acquire Crest Nicholson in early May. As one would expect with such an opportunistic bid, Crest Nicholson’s board rejected the proposed deal, saying it significantly undervalues the group.
The offer valued each Crest Nicholson share at 253p, representing a 30% premium to the company’s share price when the offer was initially made.
Under the terms of the offer, Crest Nicholson shareholders would receive 0.093 Bellway shares for each share they hold in Crest Nicholson. Based on Bellway’s share price of 2,718p at the close of business on June 13, 2024, the offer also represents a 20.5% premium to Crest Nicholson’s 3-month volume-weighted average price.
Bellway’s board believes that a combination of the two companies would bring together the strengths of each business. Crest Nicholson’s board are not buying it and has rebuffed the approach. Bellway have until 11 July to make a formal bid. On the face of it, such a tie-up would make little sense for Crest Nicholson shareholders.
