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Crest Nicholson rejects Bellway’s £650m takeover offer

Martyn Clark
Analysts say Crest Nicholson's new boss Martyn Clark will have his work cut in trying to revive the business's fortunes

Crest Nicholson has rejected an unsolicited £650m takeover bid from Britain’s fifth-largest housebuilder, which it said “significantly undervalued” the business.

The approach from Bellway, which was tabled last month and announced last night, led to shares in Crest Nicholson rising by more than 9pc as markets opened.

It comes amid a broader slowdown in Britain’s housing sector, which has been hammered by high interest rates and soaring costs.

In its latest half-year results published on Thursday, Crest Nicholson posted a £31m loss in the six months to May, as it warned that profits for the year were set to be less than expected.

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The update led to shares in the business falling 11.6pc.

Despite its recent struggles, bosses said they rejected Bellway’s offer after concluding it “significantly undervalued Crest Nicholson and its future standalone prospects”.

Bellway, which is valued at around £3.2bn, said on Thursday that there remains “compelling strategic and financial rationale” for a potential agreement, claiming it would allow Crest Nicholson to lower its debt and “benefit from the scale of the combined business”.

Crest Nicholson confirmed the rejection of Bellway’s offer on what is Martyn Clark’s first day as chief executive, as he recently moved from rival housebuilder Persimmon to replace Peter Truscott.

Over the past year, the developer has been hit by rising costs and planning delays, while high interest rates have slowed demand among buyers.

This has led to Crest Nicholson issuing five profit warnings since August 2023, with its share price down by nearly 50pc since its pandemic peak in May 2021.

Bellway’s offer last month valued Crest Nicholson at 253p per share, a premium of 18.8pc on Crest Nicholson’s share price at the end of the day on Thursday.

A spokesman for the company said: “Crest Nicholson remains confident in its standalone prospects, in particular given conclusion of the review of provisions for completed development sites supported by external consultants, its highly attractive land portfolio and the new leadership of Martyn Clark.”

However, Anthony Codling, analyst at RBC Capital Markets, warned that Mr Clark will face a difficult turnaround job.

Mr Codling said: We appreciate why the management team at Crest rejected the offer, but following yesterday’s profit warning, shareholders may have wished management had asked their opinion.

“Yesterday’s profit warning has weakened Crest’s hand and we believe the incoming chief executive who starts today will have his work cut out from day one.”