Bovis Homes has agreed to acquire Galliford Try's Linden Homes and Partnerships and Regeneration businesses for £1.075bn. The deal will create a national housebuilder with the capacity to build more than 12,000 homes per year over the medium term.
The parties have been in discussions about a deal for some time with talks re-opening in September after an earlier round of negotiations did not result in an agreement.
The consideration for the transaction, which is subject to the approval of Galliford Try and Bovis Homes shareholders, will be satisfied through a combination of £675m of Bovis Homes shares, £300m in cash and the transfer of Galliford Try’s ten-year private debt placement of £100m.
"This is an exciting and transformational opportunity to create a leading UK housebuilder with an enhanced customer proposition and the ability to increase delivery to more than 12,000 new homes per year," said Bovis Homes chief executive Greg Fitzerald.
"The combination with Galliford Try Partnerships gives Bovis Homes a market leading position in the high growth, more resilient partnerships market, with significant potential to increase revenue and profit while delivering more affordable homes at a time when they are needed more than ever."
He added: "I am very focused on successfully integrating these businesses in early 2020 with strong management across all business areas, and on delivering the clear benefits from the combination including at least £35m of synergies as quickly as possible."
Galliford Try said the deal would realise an appropriate premium for its housing businesses and result in its shareholders having investments in two focused and well-financed businesses, through their continuing 100 per cent shareholding in Galliford Try, and a 29.3 per cent interest in the enlarged Bovis Homes.
It added that Galliford Try would be transformed into a well-capitalised, standalone construction-focused group.
"This transaction is a positive development which is in the best interests of both our shareholders and wider stakeholder group," said Galliford Try chairman Peter Ventress.
"For Galliford Try, it establishes a focused and well-capitalised construction business led by a very experienced and dedicated management team. Supported by a robust order book and strong market positions in key sectors, Galliford Try will be well positioned for the future.
"This transaction also creates one of the UK's leading housebuilding and partnerships businesses with great opportunity ahead, from which Galliford Try shareholders will benefit through their continued shareholding."