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Bovis Home Group

Bovis Homes Group PLC acquisition of Galliford Try plc’s Linden Homes and Partnerships & Regeneration businesses

Bovis Homes Group PLC (LON: BVS) has announced that it has agreed to acquire Galliford Try plc‘s Linden Homes and Partnerships & Regeneration businesses for consideration of £1.075 billion[1].

The consideration is comprised of a combination of shares in Bovis Homes and cash resulting in Galliford Try Shareholders receiving a stake of 29.3 per cent. in the Enlarged Group upon Completion (after implementation of the Placing and the Bonus Issue described below).

Bovis Homes also announced today a non pre-emptive placing of up to 13,472,591 new ordinary shares of £0.50 each in the capital of the Company representing approximately 9.99 per cent. of Bovis Homes’ existing issued share capital, which is expected to raise gross proceeds of up to £157 million[2]. Bovis Homes proposes to use the net proceeds of the Placing to part fund the cash component of the Acquisition consideration.

Acquisition highlights

· An excellent and unique opportunity for Bovis Homes to acquire a top UK housebuilder and a leading partnerships business, expected to transform the Group and deliver the following key benefits:

o Creates a top five national housebuilder with the capacity to deliver more than 12,000 homes per year over the medium term, enabling the Enlarged Group to compete more effectively against the established major housebuilders;

o Gives Bovis Homes a leading position in the high-growth, more resilient partnerships market with Galliford Try Partnerships being one of the leading and most established businesses in this area;

o Opportunity to shift Partnerships’ revenue mix towards higher margin land-led development;

o Highly complementary geographic footprints strengthening core areas for Bovis Homes and providing the opportunity to expand into attractive regions; and

o Brings together two high-quality, well recognised housebuilding brands of Bovis Homes and Linden Homes enabling dual branding opportunities increasing overall production and sales.

· The Bovis Homes management team is uniquely positioned to integrate the businesses successfully with strong leadership across all business areas.

· The Board believes that the Enlarged Group will achieve estimated recurring run-rate pre-tax cost synergies of at least £35 million per annum by the end of the second full financial year following Completion

· It is anticipated that the Acquisition will be low double-digit EPS enhancing in the first full financial year post-Completion with further significant EPS enhancement in the second full financial year post-Completion

· The transaction is structured to ensure a robust balance sheet post Completion

· Total consideration of £1.075 billion[3] comprising:

o The issue to Galliford Try shareholders of 63,739,385 Consideration Shares valued at £675 million based on Bovis Homes’ closing share price on 9th September 2019[4]

o cash of £300 million to be financed by:

– 9.99% Accelerated Bookbuild (gross proceeds of up to £157m);

– £100m New Term Loan; and

– utilisation of the Company’s balance sheet resources;

o the novation from Galliford Try to Bovis Homes of Galliford Try’s £100 million 4.03% senior unsecured notes due February 2027.

The Acquisition is a ‘Class 1 transaction’ for Bovis Homes under the Listing Rules and accordingly requires the approval of Shareholders.

Bonus Issue and second interim dividend

As included in the announcement dated 10 September 2019, Bovis Homes today announces that, conditional upon completion of the Acquisition, rather than pay the expected special dividend of £60 million, it will return value to shareholders by way of a bonus issue settled at Completion through the issue of 5,665,723 ordinary shares of £0.50 each in the capital of the Company to shareholders on the Company’s register of members as at 6.00 p.m. on 2 January 2020. This will include holders of the Placing Shares but exclude recipients of the Consideration Shares.

As at the Latest Practicable Date, the Bonus Issue is expected to be for an amount up to £66 million (calculated using a share price of £11.63, being the closing share price on the Latest Practicable Date) through the issuance of up to 5,665,723 Shares settled at Completion.

Bovis Homes also announces today that it expects to pay a cash dividend of up to 41 pence per Share in May 2020 to shareholders on the Company’s register of members as at 6.00 p.m. on 27 December 2019 which shall include holders of the Placing Shares but exclude recipients of the Consideration Shares.

The Second Interim Dividend will be in lieu of the Bovis Homes 2019 final dividend and the payment date of the Second Interim Dividend is in line with the normal final dividend payment timetable.

Next Steps

· Bovis Homes expects to post a shareholder circular later today to convene a General Meeting for approval of the Acquisition, the Bonus Issue and certain related matters on 2 December 2019.

· Bovis Homes also expects to publish a prospectus later today relating to the Consideration Shares and the application for admitting new shares to the premium segment of the Official List and to trading on the London Stock Exchange’s Main Market for listed securities.

· The Circular and the Prospectus have been submitted to the FCA for approval and are expected to be made available later today at www.bovishomesgroup.co.uk. A copy of each of the Circular and the Prospectus will be submitted to the National Storage Mechanism and will shortly be available for viewing.

· Bovis Homes also expects that a Scheme Document in relation to the Acquisition will be sent or made available by Galliford Try to Galliford Try Shareholders on 8th November 2019. The Scheme Document contains, amongst other things, notices convening a meeting of the Galliford Try Shareholders convened at the direction of the Court and a general meeting of Galliford Try Shareholders. The Galliford Try Court Meeting and the Galliford Try General Meeting will take place on 29 November 2019. It is expected that the Scheme Document will be made available on the Galliford Try website: www.gallifordtry.co.uk.

· Completion is anticipated to occur on the 3rd January 2020.

Greg Fitzgerald, CEO of Bovis Homes Group said:

“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.

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.

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 £35 million of synergies as quickly as possible.

Over the past few years we have worked hard to ensure the customer is central to everything we do. As a combined business, this commitment to delivering high levels of build quality and customer satisfaction will remain a core objective.”

Peter Ventress, Chairman of Galliford Try plc, commented:

“This transaction is a positive development which is in the best interests of both our shareholders and wider stakeholder group. 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.”

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