Reuters – Redrow Chairman Proposes Buyout of Housebuilder

Three investment funds led by the chairman of Redrow are considering a takeover offer for the British housebuilder valuing it at 562 million pounds ($889 million), Reuters wrote Friday. Bridgemere Securities, controlled by Steve Morgan, Penta Capital LLP and Toscafund Asset Management LLP said on Friday they were considering a cash offer of 152 pence per share. Shares in Redrow, one of the smaller London-listed housebuilders, were up 2.7 percent to 155 pence in early trading, having risen 16 percent in the past month.

(Reuters) – Three investment funds led by the chairman of Redrow are considering a takeover offer for the British housebuilder valuing it at 562 million pounds ($889 million).

 

Bridgemere Securities, controlled by Steve Morgan, Penta Capital LLP and Toscafund Asset Management LLP said on Friday they were considering a cash offer of 152 pence per share.

 

Shares in Redrow, one of the smaller London-listed housebuilders, were up 2.7 percent to 155 pence in early trading, having risen 16 percent in the past month.

 

Redrow said it would consider the approach and shareholders should take no action.

 

The Morgan-led consortium said its offer was “a strong value proposition when considered in the context of Redrow’s share price performance in recent years”, adding the shares had traded at a significant discount to reported net asset value over an extended period.

 

Peel Hunt analyst Robin Hunt, who noted Morgan had lifted his stake to 40.4 percent in a placing earlier this year, said it “was always possibly he was going to push for the whole thing. So it is not entirely a surprise.

 

“I would guess you would make the assumption that we are still at a relatively low point in the house market cycle.”

 

Morgan, who owns English second-tier soccer club Wolverhampton Wanderers, and Toscafund, with a 13.8 percent stake, are Redrow’s two largest shareholders.

 

In April, Morgan increased his stake through a placing and open offer that raised 80 million pounds for Redrow. The housebuilder said it would use the cash to step-up investment in London and opportunities outside the capital.

 

Morgan founded Redrow in 1974 in north Wales and floated the group 20 years later. He left in 2000 to return nine years later after a boardroom coup. There have been persistent reports since that he would try to take the business private again.

 

Redrow reported an 80 percent jump in first-half profit in February as its focus on higher-priced family houses paid off.

 

In June, the government said it hoped to spark a 1930s-style house building boom by using its low borrowing costs to make finance cheaper, in an effort to drag the economy out of a second recession in four years without abandoning austerity plans.