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Monday, 15 January, 2001, 12:05 GMT
Persimmon to enter Beazer race
Britian's house builders suffer from a low stock market rating
Britain's house builders have a low stock market rating
UK construction firm Persimmon is considering an offer to buy its rival Beazer, casting further doubt on Beazer's planned merger with Bryant group.

Persimmon's plan comes as rival Taylor Woodrow redoubles its efforts to lure Bryant away from the 850m Beazer deal.

My gut feeling is the merger won't go ahead, but there is no real money on the table

Dave Bradbury, fund manager
All four companies are looking to build market share in a sector that suffers from low stock market ratings.

On Monday Taylor Woodrow made an offer of 75p and 0.7 shares for each Bryant Group share, valuing Bryant at 523m.

The offer topped an earlier bid of 55p cash and 0.8 Taylor Woodrow shares for each Bryant share, valuing the company at 512m, which was rejected by Bryant on Friday.

Both Persimmon andTaylor Woodrow face an uphill task as 77% of Beazer shareholders have already voted in favour of the merger with Bryant, which would create a new company called Domus - the Latin word for 'house'.

Bryant shareholders are due to vote on the planned merger at an extraordinary general meeting on Monday.

Too late

Some institutional investors believe Taylor Woodrow and Persimmon have left their take-over approaches too late.

"It's very late in the day, as a lot of institutions have already voted in favour of the deal.

"Generally, most institutions find it difficult to change their mind once they have cast their vote," said Canada Life Assurance fund manager Dave Bradbury.

Mr Bradbury, whose fund owns 1.5% of Beazer and under 1% of Bryant, said he had voted in favour of Domus, although he still felt the Domus plan might not go ahead.

"My gut feeling is the merger won't go ahead, but there is no real money on the table," he added.

Merrill Lynch analyst Kevin Cammack also felt the Domus deal had a good chance of being approved.

"I think they've got the proxies at the moment to give them the majority to declare it, but the question is how much they'll come under pressure from the institutions to defer the meeting".

Low stock market rating

The FTSE All Share Construction & Building Materials Index has a (share) price to earnings (PE) ratio of 11.2, far below the average PE of 22.5 for the FTSE All Share index, according to financial publishers Barra.

The low share price shows how little attraction the industry holds for most investors. Mergers and acquisitions are seen by many as a sure way to improve the attractiveness of a company.

Persimmon intends to submit an indicative offer proposal to Beazer's board by no later than 19 January if the Domus deal falls through, although it added this was "not certain".

Beazer rejected two approaches by Persimmon last year. It declined to comment on the possibility of another approach from Persimmon.

Beazer shares rose by four pence, or 2.4%, to 172p by 0955 GMT. Bryant shares were unchanged at 182p.

Taylor Woodrow was up by 1.5p to 173p, while Persimmon was down by two pence to 275p.

The planned sector consolidation has helped push up the FTSE All Share Construction & Building Index, which has risen by about 12% since the start of December.

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See also:

12 Jan 01 | Business
Taylor Woodrow ups bid for Bryant
11 Jan 01 | Business
Taylor Woodrow bids for Bryant
14 Dec 00 | Business
House giants come under same roof
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