Crest Nicholson: Bellway’s bid ‘significantly undervalued’ housebuilder

Crest rejected a bid from Bellway. Here a construction worker cuts a breeze block brick to size for a new home under construction at a Crest Nicholson Holdings residential housing development Photographer: Chris Ratcliffe/Bloomberg via Getty Images

Housebuilder Bellway has until next month to table a new offer for its rival Crest Nicholson after the smaller firm confirmed it rejected a £650m bid last month on the grounds it “significantly undervalued” the company.

Bellway yesterday went public with the news it had tabled a bid on 7th May for its smaller rival in the latest of a flurry of consolidation efforts in the UK’s homebuilding industry, which has been squeezed by weak demand over the past two years.

When it revealed the terms of its deal yesterday, Bellway said it believed there was “compelling strategic and financial rationale” for a tie-up, highlighting long-term opportunities to grow in the market.

However, in a statement today, Crest said it had roundly rejected the deal, meaning the bigger firm has until 11th July to table a new bid or walk away under UK takeover rules.

“The Board of Crest Nicholson evaluated the Revised Proposal with its financial advisers and concluded that it significantly undervalued Crest Nicholson and its future standalone prospects and was not in the best interests of Crest Nicholson’s shareholders,” the firm said in a statement. “The Board therefore unanimously rejected the Revised Proposal on 14 May 2024.”

The revised bid followed an earlier unsolicited approach from Bellway on 25th April 2024 regarding a possible all-share offer for Crest Nicholson, under which Crest Nicholson’s shareholders would receive 0.089 new ordinary shares in Bellway.

That proposal was also unanimously rejected by the Board of Crest Nicholson, with the board saying “it fundamentally undervalued Crest Nicholson and its future prospects”.

Earlier in the day, Crest warned its annual profit would crater by at least a third and after it reported an 88 per cent slump in half-year earnings yesterday on the back of slowing demand.

However, Bellway, raised its annual average selling price forecast last week and pointed to strong trading in the spring selling season.

Any tie-up would mark the latest bumper deal in the sector after Barratt said it would by rival Redrow in a £2.5bn deal earlier this year.