Homebuilder Galliford rejects £950m Bovis bid
Construction firm Bovis offered to pay £950m to buy rival Galliford Try's home building business but was rejected, it has emerged.
Galliford said the offer was too cheap and that it remained confident in its long-term prospects after rejecting the bid.
Bovis said the two companies were no longer in discussions.
Two years ago Galliford Try abandoned an effort to buy Bovis after it was rebuffed.
Bovis had offered Galliford shareholders £950m in shares for its Linden Homes and Partnerships & Regeneration businesses.
Before Bovis's offer Galliford's market value was about £598m. Bovis itself had a market value of about £1.34bn.
Galliford shares rose 8% in early trading.
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Bovis said one concern for Galliford was the viability of the remaining business.
Buying the Linden Homes and Partnerships & Regeneration businesses would leave Galliford with its construction business, which includes building projects from airports and harbours to prisons and office space.
"Galliford Try did not believe that the proposal fully reflected the value of the housing businesses and the need to ensure that the remaining Galliford Try UK listed construction focused group had a viable capital structure," Bovis said in a statement.
While Galliford's construction business earns half the sales for the company, it operates on wafer-thin margins.
For the most recent six-month trading period, its Linden Homes and Partnerships & Regeneration businesses made £91.3m in profit, but construction posted £6.3m.
As house price growth slows through the UK, home builders may look to other ways to maintain their margins, such as mergers.
In 2017, Galliford Try and another builder Redrow saw an opportunity to snap up Bovis which was going through a bad patch.
However, both firms had their takeover offers rejected and walked away from Bovis.