Yahoo Finance Housebuilder Vistry swoops on Countryside in £1.25bn bet on affordable housing
Vistry Group has agreed to buy rival housebuilder Countryside Partnerships in a £1.25bn bet on affordable housing as the property market starts to slow.
Countryside’s board has agreed to a cash and share offer totalling around 249p per share, marking a 9.1pc premium to its closing price at the end of last week.
Under the deal – first reported in the Telegraph – Vistry will rebrand its partnerships division, which works with councils and housing associations to build affordable homes, under the Countryside name.
Greg Fitzgerald, chief executive of Vistry, said Britain is struggling from an acute shortage of affordable housing.
He said he expected the Government to spend heavily on infrastructure in the coming years, adding that Liz Truss would be a positive force for housebuilders.
He said: “I think she looks pretty good from a political perspective and I would have thought what she said about housing, infrastructure spend and easing the cost-of-living crisis can only be a positive thing for both private and affordable housing.”
The takeover comes after several major Countryside investors called for a shake-up of the business amid unrest over its failure to capitalise on the pandemic property boom.
Countryside put itself up for sale in June after rejecting two unsolicited takeover bids from US investor Inclusive Capital worth as much as £1.5bn.
It also faced pressure from activist Browning West, which accused bosses of “significant destruction of shareholder value” and called for a sale of the business.
In-cap today said it was withdrawing from the bidding process and supported Vistry’s offer. Browning West – Countryside’s largest shareholder – also said it backed the deal.
Shares in Countryside rose more than 5.5pc to the top of the FTSE 250.
The Countryside brand will be added to Vistry’s existing stable, which includes Bovis Homes, Linden Homes and Drew Smith.
Mr Fitzgerald said he expected cost savings of at least £50m as a result of the tie-up, with revenues from the combined partnership division to top £3bn per year in the medium term.
He added that the affordable housing business could be spun off if the combined group was undervalued by shareholders by 2025.
It comes as housebuilders brace for a slowdown in the property market amid rising interest rates and a jump in energy bills.
The sale also caps a torrid period for Countryside, which has seen its shares tumble almost 50pc this year after a profit warning and a string of management mis-steps.
Douglas Hurt, chairman of Countryside, said: “The combination will create a leading, enlarged partnerships business and is an opportunity to leverage both Countryside’s brand and place-making experience with the growing Vistry partnerships business, alongside Vistry’s established housebuilding business.
“The scale of the combined group will enable the delivery of synergies, operating efficiencies and further growth for the benefit of Countryside shareholders and wider stakeholders.”
