Board members at housebuilder Crest Nicholson say they are "minded to recommend" a revised takeover offer from larger rival Bellway that values the firm at £720m.
Bellway was knocked back by the Surrey-based firm last month having made a £650m approach, but a new update on the London Stock Exchange shows board executives are willing to encourage shareholders to accept should a firm offer materialise. Newcastle-based Bellway's new proposal includes giving Crest Nicholson shareholders 0.099 Bellway shares for each Crest share they own, and a total dividend of 4p per Crest share.
Both firms have now agreed to an extended "put up for shut up" deadline that will allow Bellway to carry out due diligence before it submits a firm bid. Under the terms of the offer, Crest shareholders would hold around 18% of the combined company.
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In a joint update to investors, the firms said: "The boards of Bellway and Crest Nicholson believe that there is compelling strategic and financial rationale for a combination of Bellway and Crest Nicholson. The revised proposal would bring together the strength of each business with complementary brands to reinforce Bellway's position as a leading º£½ÇÊÓƵ housebuilder, while enabling Crest Nicholson shareholders to benefit from the scale of the combined business.
"In addition, the board of Bellway believes a combination would deliver significant operational benefits (including procurement synergies) and the ability to open dual outlets on at least 10 current and future Crest Nicholson sites with complementary brands to drive incremental volumes at attractive margins. As part of the combination the board of Bellway intends to retain and deploy the Crest Nicholson brand across the enlarged group (including on Bellway sites)."
Bellway's previous £650m approach to Crest Nicholson was rebuffed with the target saying it "significantly undervalued Crest Nicholson and its future standalone prospects and was not in the best interests of Crest Nicholson’s shareholders".
Last week Crest also said it had received an all-share offer from Avant Homes, giving the affordable housebuilder and its US backers around 30% of the enlarged group. But Crest said it would not negotiate with Avant while Bellway discussions continued.
Bellway now has until 5pm on August 8 to announce a firm intention to make an offer for Crest Nicholson.
