British housebuilder Persimmon is reportedly considering a £1bn takeover bid for Cala Group, a rival company in the sector that is up for sale. According to sources, Persimmon, which has a market value of £4.74bn, is likely to submit an offer for Cala before the bid deadline next week.
Cala, which is being auctioned by Legal & General (L&G), is expected to have a price tag of approximately £1bn. If Persimmon is successful in acquiring the company, it would mark their largest acquisition in years. Under the leadership of chairman Roger Devlin and chief executive Dean Finch, the company’s share price has seen a significant increase of over 20% in the last year.
In their recent trading update, Persimmon stated that they are on track to deliver growth in new home completions this year, with a target of up to 10,500. The potential sale of Cala comes during a general election campaign where new home provision is expected to be a key issue. Sources suggest that both major parties are likely to announce new policies to stimulate housebuilding growth.
Analysts believe that other housebuilders, such as Persimmon’s larger rival Taylor Wimpey and Avant Homes, owned by Elliott Advisors and Berkeley DeVeer, may also consider bids for Cala. Persimmon currently holds the third-largest market capitalisation in the UK, behind Taylor Wimpey and Barratt Developments.
Both Persimmon and Taylor Wimpey were among eight housebuilders named by the Competition and Markets Authority in February for potentially exchanging commercially sensitive information. A takeover of Cala by another major housebuilder would demonstrate further consolidation in the industry, following Barratt Developments’ recent £2.5bn acquisition of Redrow.
The potential sale of Cala is the first major strategic move by its new chief executive, Antonio Simoes. The auction is being overseen by bankers at Rothschild. Simoes has previously described Cala as “a very strong business” during an earnings call earlier this year when asked about the company’s future ownership. L&G acquired full control of Cala in 2018.
Cala reported a decline in half-year profits last autumn, citing a “challenging market”. However, the company has set a long-term goal of building 3,000 homes annually. Both Persimmon and L&G declined to comment on the potential takeover on Saturday.
