The rapidly cooling UK housing market has caught up with Countryside Partnerships Plc after the company agreed to sell itself at a price that’s lower than earlier offers.
(Bloomberg) — The rapidly cooling UK housing market has caught up with Countryside Partnerships Plc after the company agreed to sell itself at a price that’s lower than earlier offers.
Vistry Group Plc has agreed to buy Countryside in a deal that values the embattled UK homebuilder at about £1.25 billion ($1.4 billion). The cash-and-share deal has been recommended by the boards of both companies, according to a statement Monday. Vistry fell and Countryside rose in early London trading.
Under the terms of the deal Countryside holders will get 0.255 of a new Vistry share and 60 pence in cash for each Countryside share. The price is about a 9.1% premium to Countryside’s last closing price.
Countryside put itself up for sale in June after coming under pressure from activist investor Browning West, which began building a stake in the company in 2020 and has been calling for a breakup. Countryside rejected two previous bids from Inclusive Capital that valued it at about £1.47 billion, saying they undervalued the company.
The UK’s housing market has been showing signs of cooling since then as rising interest rates and a cost of living crisis weigh heavily on consumers.
“This proposed combination has a highly compelling strategic rationale,” Vistry Chief Executive Officer Greg Fitzgerald said in the statement. “It will create a leader in the partnerships housing sector, with the scale and expertise to accelerate profitable growth across both partnerships and housebuilding, and expand the delivery of much needed affordable housing across England.”
Vistry fell as much as 2.5%, while Countryside rose as much as 4.65% in early London trading after the announcement.
Five major Countryside shareholders that collectively hold about 39.1% of the stock, including Browning West and Inclusive Capital, have agreed to back the deal, which is subject to regulatory approval.
The deal is the latest in a string of tie-ups spearheaded by Fitzgerald. After pushing into housebuilding while at the helm of contractor Galliford Try Holdings Plc he then acquired that unit after moving to Bovis Homes, the deal that created Vistry.
The company has since made a major push into so called partnerships, a business that builds affordable homes for public bodies and housing providers. Acquiring Countryside will significantly bolster Vistry’s partnerships business which is less sensitive to fluctuations in house prices during downturns.
HSBC and Lazard advised Vistry on the deal and Rothschild led the sales process for Countryside.
(Updates with share price move in the second and seventh paragraphs, details on signs of a cooling market from the fifth paragraph)
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
