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They couldn’t publicly comment on Bellway results, being a factor because they hadn’t been publicly released.

It just seems far too coincidental that Bellway results would have been produced in the exact week that was the deadline for negotiations.

I note crest alluded to it not being to do with cladding in their statement in which they said they were happy with their standalone prospects “given conclusion of the review of provisions for completed development sites supported by external consultants”.

Top and bottom of it, the only thing that came to light in that final hour was the Bellway results. If there was a problem with crest, it would’ve come to light early in the due diligence, and they wouldn’t bother asking for an extension to make an offer.

Bob Jackson- Can you link me to something official please? Not press speculation.

404,

Bellway released an RNS to say they were not making a firm offer- that’s all, neither side said why. It could be because their own finances deteriorated, as shown in their results, which would’ve been produced that week. It could be because crest no longer saw value in the shares Bellway were offering, due to those results.

Please open your eyes to all the possibilities.

404,

Why would Bellway ask for an extension to make a firm offer and then walk away 2 days later? They were obviously still negotiating. Thing is, they were offering £720m. Crests net asset value after £145m provision for cladding is £803m. To be on the safe side, let’s say cladding cost is double the provision, making the net asset value after c.£660m, not quite the bargain they thought at £720m.

Market cap is now £425m. They could come back with £600m, which would still be a 40% uplift on crests current share price.

Crest would not have been allowed to come out and say “we asked Bellway to increase the shares on offer because their results (which are not yet public) are dire, and Bellway decided not to increase the shares on offer”.

The offer was made public the day of crests results so they were already out in the open.

We don’t know what happened, but surely any issue with crest would be identified early on in due diligence. It seems they were still negotiating in the final days, hence the extension to submit a firm offer, and the only thing I can see would have come to light in those final days were Bellways results.

But of course, we don’t know.

404,

This doesn’t really tell us anything because they don’t state a reason for not making a firm offer. It could be that crest decided the offer of 0.099 shares on Bellway didn’t represent the same value to crest shareholders, given the results that Bellway were about to announce? And asked Bellway to increase the shares on offer?

The fact that it was left so late in the day, even asking for an extension suggests to me that the only problem that suddenly emerged towards the end of the due diligence was Bellways year end figures, nothing material would’ve come to light so late on crests side.

Do we know for sure that Bellway pulled out of crest and not the other way round? I know that is the assumption of the press, but I can’t find anything directly from the horses mouth.

This was not a cash take over offer, crest shareholders were set to receive 0.089 shares in Bellway. Perhaps crest turned it down after seeing bellways poor results.

We don’t really know.

Bellways year end was on 31st July. It asked for an extension to submit a final bid at the beginning of August, so it was obviously still thinking about it, and can’t have found anything too untoward with crest, before announcing it was pulling out a couple of days later. Although Bellways year end had only just passed, the results were not publicly available at the time, but they were pretty dire- GP down 44.6%, revenue down 30%, swung from a net cash position of £232m to a net debt of £10m. They weren’t really in a position to be taking over another company, but better to make it look like it was a crest problem rather than a Bellway problem.

Crest will bounce back. Realistically the assets will be worth at least £600m after taking into account further provision for cladding and any inaccuracies, and they’re only trading at just over £400m- 50% upside to be had here.

Evening strictly,

Aye, probably because the CEO came from Galliford try. Look what happened to its share price since he left in 2019. Hopefully crest sees something similar now he has retired and been replaced the the PSN chief commercial officer.

Funnily enough, when Peter Trustcott left Galliford try in 2019, the share price stopped going down, and has gone up over 500% since!

Interesting that this is now trading back at 170 when Bellway was offering 270 less than 3 months ago, but pulled out due to worries about how much the cladding bill will be.

The net asset value for crest on the latest set of results is £803m, including a £145m provision for the cladding work. The results state they had assessed 57% of portfolio to produce this estimate. Even if the cladding bill is double what they have provision for, the net asset value would be around £658m, so it’s fair to see why Bellway was hesitant to pay £720m.

BUT Creat has fallen so much just lately that it’s now trading for a market cap of just £433m. Bellway could well come back yet with a revised offer 20% (£144m) lower than they originally offered, and that would still represent a 33% premium on the current share price.

As a side note, Crest has always been a poor performer in terms of ROE, so it has traded at a lower PBV than the other housebuilders- But the former CEO, Peter Trustcott, who also delivered a poor performance at Galiford try during his short tenure (and halved their SP too) has just recently gone, and is replaced with the chief operating officer of Persimmon, which during his (and Jeff’s) tenure was the best performing housebuilder, and saw the share price rocket.

Strictly,

I no longer hold any crest shares. The only thing going for it is PBV, but that’s not all it seems when you delve a little deeper.

£585m of liabilities, plus the £552 market cap would give a total cost of £1,137m if you were to acquire the assets outright. Take away the 163.6m of cash on the balance sheet and you could effectively purchase £1108m of inventories for £973.4m, which is only a 12% discount. Now factor in those assets should probably be impaired at least 12% to reflect current market conditions, and there’s no discount on book value.

Morning Strictly,

I trust your figures are correct. As you know, I also used to see crest as being best perceived value, due to PBV, but not any more. It’s clear that this isn’t run as well as other house builders, hence the poor shareholder returns.

Take your 4.5p EPS figure, even if they paid all of that out in a divi, the yield would be circa 2%. While I agree the market cap undervalues the assets, I don’t think this is a good investment for shareholders with the current BOD at the wheel, and the SP will most likely go back down when the FY results come out next week.

It seems to me that they’re just trying to soften the blow when the FY results come out next week. Think the change in net cash will make grim reading. Is the divi safe?

Perhaps they should just keep selling bits off then to service the debt….

Sounds like a plan.

Perhaps you’ll be singing a different tune when you start getting the interest on your cash, instead of the investment platforms?

I would imagine most of the income these platforms make is derived from retaining interest on cash deposits, so a 10% fall is nowhere near prices this in imo. Trading212 just announced they’ll start paying 4.5% on GBP deposits.

Do you like talking to yourself Mary?

if you cut the bs and just look at the figures, house prices declined from £259k to £258k… so it really depends on whether or not you buy into the seasonal adjustment *******s.

halifax data is out tomorrow. if they stick to the facts instead of seasonally adjusting, it could be a bad day for housebuilders.

Can’t see going that low…

Steve, I don’t recall Bdev or Tw ever trading anywhere near 3x pbv? Their share price raised from the dumps because it was highly likely they would go bust due to liquidity issues around 2008, but they still never recovered to 2007 highs.