Acquisition Resources

Britain’s biggest homebuilder, Barratt Plc, has agreed to buy smaller rival Wilson Bowden in a deal worth £2.2 billion in cash and shares. 

Barratt will pay 950 pence in cash and 1.06 new shares for each Wilson Bowden share, representing around a 23% premium on the company’s closing price on 24th November, the last day of trading before a sale was announced.

Wilson Bowden had reportedly also received offers from George Wimpey and a consortium led by Scottish property magnate Tom Hunter, but Barratt has emerged victorious to create “one of the UK’s largest housebuilders.” 

The deal, the biggest to date in the UK’s building sector, has led Citigroup analysts to comment that “it is likely to lead to more speculation of further deals in the sector.” The takeover widens the gap with rival developer Persimmon, and an analyst at Man Securities in London said “this looks like a good deal and creates a company that may go straight to the FTSE 100.”

With 52% of Barratt’s revenue coming from the South of England, and 48% of Wilson Bowden’s coming from the Midlands, Barratt Chief Executive Mark Clare said during a conference call “This will give us access to all markets, which in today’s world is key, and creates a powerhouse for growth. The two businesses are an exceptional fit.” 

David Wilson, Wilson Bowden Chairman and founder, commented “Both businesses have powerful brands and a wealth of strong management, which will be developed and motivated to create fresh and exciting opportunities that will drive the combined business forward.”