TIDMGFRD TIDMBVS
RNS Number : 7400L
Galliford Try PLC
10 September 2019
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART
IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT
JURISDICTION.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.
10 September 2019
For immediate release
Bovis Homes Group PLC and Galliford Try plc
Statement regarding a potential combination between Bovis Homes
and Galliford Try's Linden Homes and Partnerships &
Regeneration divisions
Galliford Try would be a well-capitalised, standalone
construction-focused group
The Boards of Bovis Homes Group PLC ("Bovis Homes") and
Galliford Try plc ("Galliford Try") announce that they have
re-engaged in preliminary discussions regarding a potential
combination (the "Potential Transaction") of Bovis Homes and
Galliford Try's Linden Homes and Partnerships & Regeneration
divisions (the "Housing Businesses") and have agreed high-level
terms upon which the Potential Transaction would be implemented.
There remains significant work to be completed before definitive
transaction documentation can be agreed, including agreement of
detailed commercial terms, completion of due diligence and
arranging transaction funding.
The Potential Transaction relates solely to a combination of
Bovis Homes and Galliford Try's Housing Businesses and does not
relate to a merger with Galliford Try. The Potential Transaction
envisages Galliford Try remaining a UK-listed construction-focused
group owned entirely by Galliford Try shareholders.
Potential Transaction terms
If the Potential Transaction proceeds, it is expected to value
the Housing Businesses at GBP1.075 billion comprising:
- the issue to Galliford Try shareholders of 0.57406 Bovis Homes
shares per Galliford Try share, which would equate to 63,739,385
Bovis Homes shares (in aggregate) valued at GBP675 million based on
Bovis Homes' closing share price on 9 September 2019, being the
last business day prior to this announcement; plus
- the payment of GBP300 million in cash (the "Cash Consideration") to Galliford Try; plus
- the transfer to Bovis Homes of Galliford Try's 10-year debt
private placement of GBP100 million (the "Debt Private
Placement").
In addition, Galliford Try's pension schemes would be
transferred to Bovis Homes at completion of the Potential
Transaction on terms acceptable to the Galliford Try pension
schemes' trustees and Bovis Homes.
The Cash Consideration would be subject to customary completion
adjustments.
Strategic rationale
The Bovis Homes and Galliford Try Boards believe that the
Potential Transaction will provide Bovis Homes with an enhanced
housebuilding platform to compete more effectively in the UK
housebuilding market, accelerate Bovis Homes' move into the higher
growth partnerships and regeneration markets and provide Bovis
Homes with a complementary geographical footprint and strategic
land bank.
The Bovis Homes and Galliford Try Boards believe that the
Potential Transaction will generate significant synergies and
create substantial shareholder value. The synergies are expected to
originate from both Bovis Homes and Galliford Try and comprise both
operational and procurement savings.
The Galliford Try Board believes that the Potential Transaction
will result in Galliford Try becoming a well-capitalised standalone
construction-focused group, benefitting from the recent operational
restructuring which refocused the business to deliver improved
future performance. The division's strengths in UK building and
infrastructure, particularly in the highways and water sectors,
along with the spread of work for both public and private clients
provide a strong foundation for Galliford Try's future as an
independent construction group. In addition, the Aberdeen Western
Peripheral Route joint venture continues to negotiate on the
significant claim with the client and Galliford Try shareholders
will continue to benefit from any future resolution of this
claim.
Cash Consideration funding
If the Potential Transaction proceeds, the Cash Consideration of
GBP300 million would be financed by: (i) an equity placing by Bovis
Homes, by way of an accelerated bookbuild, for cash of 9.99% of
Bovis Homes' existing share capital (the "Placing"); and (ii) the
raising of additional debt by Bovis Homes and utilisation of its
existing balance sheet resources. It is the intention of the Bovis
Homes Board to retain a strong and robust balance sheet.
In addition, if the Potential Transaction proceeds, the GBP60
million of capital return expected to be paid in 2019 would,
subject to shareholder approval, be returned by way of a bonus
issue (the "Bonus Issue") settled at completion of the Potential
Transaction through the issue of fully paid Bovis Homes shares to
Bovis Homes shareholders. The Bonus Issue would equate to 5,665,723
shares (in aggregate) valued at GBP60 million based on a Bovis
Homes share price of GBP10.59, being the closing share price on 9
September 2019.
In addition, it is anticipated that Bovis Homes' 2019 final
dividend will be replaced by a second interim dividend which will
be paid in cash to Bovis Homes shareholders only.
Following completion of the Potential Transaction, and taking
into account the issue of new Bovis Homes shares under the Placing
and the Bonus Issue, Galliford Try shareholders would own in
aggregate approximately 29.3% of the enlarged Bovis Homes
entity.
Given the size of the Potential Transaction, it would be a Class
1 transaction for both Bovis Homes and Galliford Try pursuant to
the UK Listing Rules and would therefore be subject to a
shareholder vote by both sets of shareholders.
The discussions between Bovis Homes and Galliford Try are at an
early stage and a definitive announcement on the Potential
Transaction is subject, inter alia, to:
- the completion of satisfactory due diligence by Bovis Homes;
- the completion of satisfactory due diligence by Galliford Try;
- the finalisation of the potential synergies of the Potential Transaction;
- the agreement of definitive transaction documentation;
- the approval of the transfer of Galliford Try's Debt Private Placement;
- the Placing;
- the raising of additional debt on terms acceptable to Bovis Homes; and
- the transfer of Galliford Try's pension schemes to Bovis Homes
on terms acceptable to the Galliford Try pension schemes' trustees
and Bovis Homes.
Commenting on the Potential Transaction, Greg Fitzgerald, CEO of
Bovis Homes said:
"While discussions are still at early stages, this potential
combination represents an exciting and transformational opportunity
to create a leading UK housebuilder with enhanced scale,
well-positioned to make the most of current opportunities and drive
forward on our commitment to delivering high-quality homes and
excellent service that our customers and housing partners deserve.
We know that we only succeed as a business if we succeed for
them.
Galliford Try's Partnerships business is a fantastic brand, with
a very strong position in the UK. Combining it with Bovis Homes'
newly launched Partnerships Housing Division would enable us to
become the partner of choice for delivering more affordable homes
at a time when these are needed the most.
Based on my familiarity with the businesses and the compelling
strategic rationale, I think this is a massive opportunity and as a
substantial shareholder of Bovis Homes, my intention is to
subscribe to the placing if the transaction proceeds."
Commenting on the benefits of the Potential Transaction for
Galliford Try, Graham Prothero, CEO of Galliford Try said:
"The transaction is an exciting opportunity to create two
strategically focused businesses. The significant cash element
within the consideration provides a firm foundation for our newly
reorganised Construction business to flourish as an independent
company. The strong balance sheet and excellent fit between the
combining businesses will be a superb platform for both private
housebuilding and partnerships, creating a unique and
well-positioned housing provider.
Much remains to be done before we can present the detailed
proposal to our shareholders and wider stakeholders. However, if
completed, we are confident this deal will generate significant
value for shareholders and a bright future for all three of our
businesses."
Discussions are ongoing and there is no certainty that the
Potential Transaction will take place nor of the final detailed
terms if it does so. A further announcement will be made when
appropriate.
The person responsible for making this announcement on behalf of
Bovis Homes is Earl Sibley, Group Finance Director. The person
responsible for making this announcement on behalf of Galliford Try
is Kevin Corbett, General Counsel and Company Secretary. This
announcement contains inside information for the purposes of
article 7 of EU Regulation 596/2014.
End.
Enquiries:
Bovis Homes Group PLC
Earl Sibley, Group Finance Director
Susie Bell, Head of Investor Relations 01732 280272
Lazard & Co., Limited (Joint Financial Adviser
to Bovis Homes)
William Rucker
Vasco Litchfield
Patrick Long
Louise Campbell 020 7187 2000
Numis Securities Limited (Joint Financial Adviser,
Sole Bookrunner and Sole Broker to Bovis Homes)
Heraclis Economides
Richard Thomas 020 7260 1000
Powerscourt (PR Adviser to Bovis Homes)
Justin Griffiths
Nick Dibden 020 7250 1446
Galliford Try plc
Graham Prothero, Chief Executive
Andrew Duxbury, Finance Director
Kevin Corbett, General Counsel and Company Secretary 01895 855 001
Rothschild & Co (Lead Financial Adviser to Galliford
Try)
John Deans
Neil Thwaites
Peter Everest 020 7280 5000
HSBC Bank plc (Joint Financial Adviser and Corporate
Broker to Galliford Try)
Mark Dickenson
Adam Miller
Keith Welch
Diraj Ramchandani 020 7991 8888
Peel Hunt LLP (Joint Financial Adviser and Corporate
Broker to Galliford Try)
Charles Batten
Edward Knight
Harry Nicholas 020 7418 8900
Tulchan Communications (PR Adviser to Galliford
Try)
James Macey White
Martin Pengelley
Elizabeth Snow 020 7353 4200
Notes to editors:
1. Bovis Homes, the FTSE 250 listed house builder, is a UK
builder of high-quality, traditional homes, ranging from two-bed
starter properties through to large five-bed family homes, with the
design and construction blending tradition with innovation, and
creating quality dwellings and developments with contemporary
living standards. For the year ended 31 December 2018, the group
completed 3,759 homes. In April 2018, Bovis Homes launched its new
housing range of 28 new house types for both private and affordable
housing. The Phoenix housing range is designed to meet today's
customers' needs including more open plan living, larger bedrooms
and better storage. It also reflects a complete construction
specification review to ensure time, material and labour efficient
designs. Customer satisfaction is central to Bovis Homes and is
reflected in the award of 4 stars by the HBF in its annual customer
satisfaction survey results published in March 2019.
2. Galliford Try plc is a leading UK housebuilding, regeneration
and construction group. It is listed on the London Stock Exchange
and a member of the FTSE 250. Housebuilding - through its Linden
Homes business - develops private and affordable homes in prime
locations with a commitment to providing excellent customer
services. Galliford Try Partnerships - its regeneration business -
delivers mixed-tenure solutions working with housing association,
local authority and private sector partners - a unique and powerful
platform, combining contracting, regeneration and mixed-tenure
development with a proven track record of delivery and quality.
Operating as Galliford Try and Morrison Construction, the
Construction business carries out building and infrastructure with
clients in the public, private and regulated sectors across the UK
focusing on building, transportation, water and environmental. At
the end of the last financial year to 30 June 2018, the Group
generated revenue of GBP3.1bn.
3. Calculations in this announcement are based on the issued
share capital of 134,858,296 ordinary shares for Bovis Homes and
111,032,617 ordinary shares for Galliford Try.
4. Lazard & Co., Limited, which is authorised and regulated
by the Financial Conduct Authority in the United Kingdom, is acting
exclusively for Bovis Homes and for no-one else in connection with
the Potential Transaction and will not be responsible to anyone
other than Bovis Homes for providing the protections afforded to
its clients or for providing advice in connection with the
Potential Transaction. Neither Lazard & Co., Limited nor any of
its affiliates owes or accepts any duty, liability or
responsibility whatsoever (whether direct or indirect, whether in
contract, in tort, under statute or otherwise) to any person who is
not a client of Lazard & Co., Limited in connection with this
announcement, any statement contained herein, the Potential
Transaction or otherwise.
5. Numis Securities Limited, which is authorised and regulated
in the United Kingdom by the Financial Conduct Authority, is acting
for Bovis Homes in connection with the Potential Transaction and
no-one else and will not be responsible to anyone other than Bovis
Homes for providing the protections afforded to clients of Numis
Securities Limited nor for providing advice in relation to the
Potential Transaction or any other matter referred to in this
announcement
6. N.M. Rothschild & Sons Limited ("Rothschild & Co"),
which is authorised and regulated by the Financial Conduct
Authority in the United Kingdom; HSBC Bank plc ("HSBC"), which is
authorised by the Prudential Regulation Authority and regulated by
the Financial Conduct Authority and the Prudential Regulation
Authority in the United Kingdom; Peel Hunt LLP ("Peel Hunt") which
is authorised and regulated by the Financial Conduct Authority in
the United Kingdom, and each of Rothschild & Co's, HSBC's and
Peel Hunt's respective directors, officers, employees, agents,
affiliates, advisers and agents, are acting for Galliford Try and
no-one else in connection with the Potential Transaction referred
to in this announcement or any other transaction(s), arrangement(s)
or matter(s) referred to in this announcement and will not regard
any other person (whether or not a recipient of this announcement)
as a client and will not be responsible to anyone other than
Galliford Try for providing the protections afforded to their
respective clients or for providing advice in connection with the
Potential Transaction referred to in this announcement or any other
transaction(s), arrangement(s) or matter(s) referred to in this
announcement.
This information is provided by RNS, the news service of the
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Authority to act as a Primary Information Provider in the United
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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