Shares in the British homebuilder Bovis (LON:BVS) jumped by eight percent on Monday morning after the house builder received two potential takeover offers from rivals Redrow (LON:RDW) and Galliford Try (LON:GFRD).
The company has been the subject of takeover speculation following a troubled 2016 where the company found itself in the middle of a string of problems including the loss of its chief executive and a drop in full-year profits.
2017 has also been off to a rocky start for the homebuilder. Last month, the company announced that it was setting aside £7 million to compensate customers who were sold houses that were unfinished and had electrical and plumbing faults.
“The share price has failed to recover from the Brexit shock last June and is still down a quarter from 2015 highs.” said Neil Wilson, of ETX Capital, who believes that Bovis had made itself a target.
Galliford, valued at £1.3bn, and Redrow, worth £1.8bn, both approached the British homebuilder after it posted results. Both companies were not aware of their competing offers until this weekend. Bovis shares closed at 828p on Friday night, giving it a market capitalisation of £1.1bn.
Bovis rejected both offers, saying that they undervalued the business. It is rumoured that Bovis also rejected Galliford’s offer because the company would prefer a deal with a pure housebuilder, rather than Galliford, which also has a construction business that operates in a range of markets, including the transport and energy industries.
However, Bovis have said that Redrow proposal was not in the interests of Bovis shareholders but there is potential for further discussions with Galliford Try.
“Redrow subsequently indicated that it was not willing to improve the terms of its proposal and discussions were terminated. Discussions with Galliford Try are ongoing.” the company said in a statement.
Under Takeover Panel rules, Redrow and Galliford now have until April 9 to make a firm offer or walk away from the homebuilding company.
Bovis shares closed at 828p on Friday night, giving it a market capitalisation of £1.1 billion.