UK housebuilder Countryside rejects $1.9 billion offer from shareholder

By Amna Karimi and Sinchita Mitra

(Reuters) -Countryside Partnerships on Monday said it rejected an "undervalued" potential takeover offer from San Francisco-based investor Inclusive Capital (In-Cap) valuing the British housebuilder at about 1.47 billion pounds ($1.86 billion).

Earlier on Monday, In-Cap, the third-largest shareholder in Countryside with a 9.2% stake, said it had made two approaches to the company's board, who refused to engage with the investment firm and give it access for due diligence.

London-listed Countryside said it had rejected both offers as it believed the proposals undervalued the company and its prospects.

In-Cap's latest offer was to buy the rest of Countryside's shares it does not already own, for 295 pence each - a premium of about 23% to the stock's last close. Countryside rejected this offer on May 26.

UK housebuilders, which enjoyed robust work-from-home related demand during the pandemic, are now battling concerns over a slowdown in the housebuilding market amid escalating inflation and a growing cost-of-living squeeze.

Last month, Countryside warned of lower annual profit following a review of its business.

"The board is confident that, with a clear strategy in place following the operational review announced on 7 April 2022, Countryside has a strong platform to deliver value in excess of the proposals," Countryside said, referring to In-Cap's potential offer.

In-Cap said Countryside would be in a better position to turnaround its business as a private company rather than as a public entity as it continues to recover from manufacturing losses and costly expansions which hit half-year profit.

Brokerage Peel Hunt said: "On balance we would be surprised to see the offer accepted at the current level, with many of the company’s top shareholders supportive of management's turnaround strategy."

Shares in the FTSE-250 listed company, which have fallen about 47% this year as of Friday's close, rose as much as 30% after In-Cap's possible offer.

($1 = 0.7911 pounds)

(Reporting by Amna Karimi in and Sinchita Mitra Bengaluru; editing by Uttaresh.V and Jane Merriman)