The owner of Scottish firm Morrison Construction is bidding to create one of Britain’s biggest housebuilding groups with a takeover of Bovis Homes.
But Galliford Try faces opposition from Redrow, which has also made an offer for the troubled Kent-based builder.
Shares in FTSE 250-listed Bovis soared yesterday following weekend announcements confirming the two companies had made offers.
Bovis confirmed on Sunday that it had rejected a share and cash deal from Redrow and an all-share transaction from Galliford Try.
Talks with Galliford Try are continuing and, if successful, would create a business capable of producing 7,000 homes a year, with a combined market valuation of £2.4billion.
In a statement, Bovis said: “The board of Bovis reviewed the proposals and concluded that neither reflected the underlying value of the Bovis business and therefore both should be rejected.
“The board also concluded that the Redrow proposal was not in the interests of Bovis shareholders as the cash element of the offer would require shareholders to crystalise value at the current Bovis valuation.
“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.”
Galliford Try said a tie-up with Bovis would deliver “significant” cost savings by combining their “operational structures, sourcing and operating practices.”
Bovis also said it was making “good progress” with plans to shore up its profitability and its search for a new chief executive was “progressing well.”
The group’s share price has sunk more than 12% since Britain voted to leave the European Union, making it vulnerable to a takeover.
Its financial performance was hit by customer complaints over the poor quality of its homes which were sold unfinished and were plagued by electrical and plumbing faults.
The firm announced last month that annual pre-tax profits were down 3% to £154.7milliion as it set aside £7million to cover remedial work and compensation for affected customers and revealed a raft of measures to improve the service.
In February Galliford Try announced pre-tax profits for the six months to December 31 up 19% to £63million, from £52.9million a year earlier. Its revenue for the period was up by 3% at around £1.3billion.
Galliford Try acquired Morrison Construction in a £42million deal in April 2006.
The Scottish firm is part of the Connect Roads consortium building the £745million Aberdeen bypass alongside Balfour Beatty and Carillion.
