British homebuilder Bellway has officially cancelled its £720 million ($921 million) takeover proposal for Crest Nicholson. The decision comes without any specific rationale provided by Bellway, leading to immediate fluctuations in both companies’ stock prices.
Following the announcement, Bellway’s shares experienced a notable increase of approximately 4%, reflecting a positive market response. In contrast, Crest Nicholson’s stock, which had risen by 15% since the initial takeover approach was made public in June, fell by around 9% on the news of the deal’s collapse. Bellway’s statement emphasised its confidence in its own financial robustness and operational capabilities, asserting that the company’s solid balance sheet and extensive land bank would support its growth ambitions in the coming years. Despite the failed acquisition attempt, Bellway remains optimistic about its ability to achieve volume growth independently.
On the other hand, Crest Nicholson has expressed continued optimism regarding its future prospects as an independent entity. The company’s board had previously indicated that it might recommend a firm offer to shareholders if Bellway improved its bid. Bellway’s most recent offer, valued at 273 pence per share, was the third bid in a series of proposals. Previous offers, which were at 253 pence per share and lower, were rejected by Crest Nicholson. The withdrawal of Bellway’s bid comes amidst a backdrop of consolidation within the UK’s homebuilding sector. The sector has been experiencing increased activity due to a shortage of properties, which has driven up both purchase prices and rents. The new Labour government has pledged to alleviate planning restrictions and promote further construction to address these challenges.
Notably, the consolidation trend has seen significant deals, such as Barratt’s acquisition of Redrow and Vistry’s purchase of Countryside. Last week, Bellway joined its larger competitors, Persimmon and Taylor Wimpey, in expressing optimism about the sector’s outlook following the Bank of England’s interest rate cut. Bellway’s decision to withdraw from the Crest Nicholson acquisition highlights the dynamic nature of the UK housing market and underscores the challenges and opportunities that continue to shape the sector’s landscape.
