(Alliance News) - Vistry Group PLC on Monday announced it is buying Countryside Partnerships PLC, a Brentwood, Essex-based housebuilder and urban regeneration company.
The cash-and-shares deal, worth about GBP1.25 billion, values Countryside shares at 249 pence each, a 9.1% premium to its closing price on Friday, according to Kent, England-based housebuilder Vistry.
Countryside Partnerships traded 5.2% higher at 240.00p each early Monday in London. Vistry shares slipped 0.7% to 731.50 pence.
Vistry is offering 0.255 of a share and 60 pence cash for each Countryside share. The merger is expected to close in the first quarter of 2023.
Vistry added it expects the combination to be return on capital employed enhancing from 2024.
Countryside shareholders will own about 37% of enlarged firm. "The combination would create one of the country's leading homebuilders, comprising a top tier housebuilder and a leading partnerships business, with capability across all housing tenures, and delivering much needed affordable housing," Vistry explained.
Vistry Chief Executive Greg Fitzgerald said the proposed merger has "highly compelling strategic rationale".
The company said the merger of the two firms will lead to saving at least GBP50 million, "with operational benefits including procurement processes, an improved implementation of the future homes standard and the reduction of people risk within the current tight labour market".
Vistry expects the combined revenue to increase to over GBP3 billion per year, much higher than its medium term target of around GBP1.6 billion.
Countryside's and Vistry's boards unanimously recommended deal. They both need approval of their shareholders at their general meetings which will both be held in late October or early November.
Rival bidder Inclusive Capital Partners LP said it supports the takeover and withdrew its offer.
"In-Cap fully embraces the offer for Countryside by Vistry. The combination would create a leader in the growing, asset-light, mixed tenure Partnerships market, and better positions the pro forma entity to address the affordable housing shortage in the UK," In-Cap founder and managing partner Jeffrey Ubben said.
"Also, due to significant operating synergies, In-Cap believes the combination delivers superior long-term value relative to its 295 pence per share possible cash offer," he added, referring to In-Cap's offer for Countryside in May.
By Tom Budszus; tombudszus@alliancenews.com
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Vistry Grp (VTY)