Vistry has announced plans to buy partnership housing rival Countryside in a cash and share deal worth £1.25bn.
The deal will create one of the country’s leading home builders with revenue of over £3bn.
The combined business will comprise a top tier house builder and a leading partnerships business, with capability across all housing tenures, and delivering much-needed affordable housing.
Vistry is forecasting that future operating profit from each division could top £400m, making in excess of £800m in total.
Under the terms of the deal, Countryside shareholders will receive 0.255 of a Vistry share for each of their shares plus 60p.
Five major shareholders in Countryside representing 39% of the shareholding have backed the planned takeover along with both boards.
The resulting combined business would see 45% or £1.9bn of revenue coming from Partnerships with house building representing 55% or £2.3bn from private house building.
It would hold a total land bank of over 80,000 plots – average of 162 plots per site. A further in-house strategic land capability will deliver land for both businesses, with nearly 70,000 total strategic land plots across 196 sites.
Directors at Vistry believe that the combined group can deliver at least £50m of cost savings by the end of the second year of completion.
Greg Fitzgerald, chief executive officer of Vistry, said: “This proposed combination has a highly compelling strategic rationale.
“It will create a leader in the partnerships housing sector, with the scale and expertise to accelerate profitable growth across both partnerships and house building, and expand the delivery of much-needed affordable housing across England.
“The proposed combination will add the strength of the Countryside brand to Vistry’s own well-established Bovis Homes and Linden Homes brands and will leverage the skills and market knowledge of both the Countryside and Vistry teams.
“We believe there is clear potential to generate material value for both Vistry and Countryside shareholders and wider stakeholders from a combined group with enhanced scale and superior returns and to improve the performance of key parts of Countryside’s business.
“We welcome the support of the Countryside board and the support we have already received from a significant proportion of Countryside shareholders.”
Douglas Hurt, the chairman of Countryside, said: “The combination will create a leading, enlarged partnerships business and is an opportunity to leverage both Countryside’s brand and place-making experience with the growing Vistry partnerships business, alongside Vistry’s established housebuilding business.
“The scale of the combined group will enable the delivery of synergies, operating efficiencies and further growth for the benefit of Countryside Shareholders and wider stakeholders.”
Under the new board structure, Tim Lawlor will join the executive leadership team in his capacity as chief financial officer; and Earl Sibley, currently chief financial officer of the Vistry Group, will assume the position of chief operating officer.
Stephen Teagle will lead the Partnerships business of the combined group as chief executive of the partnerships division and Keith Carnegie will lead as chief executive of the housebuilding division.
The takeover is expected to complete by the end of the first quarter of 2023.
By Aaron Morby