Crest Nicholson to Accept New Bellway Offer

The directors of the prestigious housebuilder Crest Nicholson have expressed their inclination to recommend an enhanced acquisition bid put forth by their rival, Bellway. This decision comes after the rejection of two previous bids, both exceeding a valuation of £650 million. Crest Nicholson had also been in discussions with Avant Homes, but chose to turn down the offer in favour of pursuing negotiations with Bellway.

The latest proposition, valued at approximately £720 million in all-share terms, would result in Crest Nicholson shareholders owning an 18% stake in the expanded entity. A joint statement released by both firms stated, “The Board of Crest Nicholson has indicated to Bellway that the Revised Proposal is at a value that it would be inclined to recommend unanimously to Crest Nicholson’s shareholders.”

The boards of both Bellway and Crest Nicholson view the potential merger as possessing significant strategic and financial benefits. They foresee a merger enhancing Bellway’s status as a leading UK housebuilder by combining the strengths of both companies and leveraging their complementary brands. Moreover, the integration is expected to yield operational advantages, including procurement synergies, and provide the opportunity to establish dual outlets on at least 10 current and future Crest Nicholson sites, thereby driving increased volumes at favourable margins.

If the merger materialises, Bellway intends to preserve and utilise the Crest Nicholson brand across the enlarged group, encompassing Bellway’s sites as well. The deadline for Bellway to formalise the offer has been extended to August 8.

In financial terms, Crest Nicholson suffered a pre-tax loss of £31 million in the initial six months of 2024 due to decreased revenue, a stark contrast to the £28 million profit recorded in the preceding year. On the other hand, Bellway announced its progression towards delivering 7,500 homes during the current fiscal year, aided by enhanced affordability which contributed to a successful spring selling season. It is worth noting that Bellway is one of the eight housebuilders under investigation by the Competition and Markets Authority for alleged anti-competitive practices.

A potential merger between Bellway and Crest Nicholson would give rise to a business with a gigantic turnover of £4.3 billion. The amalgamation of these two renowned entities holds the promise of reshaping the landscape of the UK housebuilding industry.