Fears over cladding costs behind Bellway’s decision to drop Crest bid
London-listed housebuilder Bellway has reportedly cited fears of Crest Nicholson’s costs to fix hazardous cladding as part of reasoning for pulling out of its £720m takeover deal.
Bellway announced in August that it would not make a firm offer to buy rival Crest Nicholson, originally stating that its “strong balance sheet” and land bank would be sufficient to fuel growth independently.
However, City sources have now said that the cladding liabilities following the Grenfell Tower tragedy were one of three issues raised during due diligence, according to a Sunday Times report.
The Sunday Times report said there were also disagreements over their valuations of Crest’s land bank and available stock of houses.
Crest Nicholson and Bellway have both declined to comment.
The final Grenfell Tragedy report was published last week, which once again highlighted the importance of private housebuilders’ responsibility to remove any hazardous or dangerous cladding.
The Grenfell Tower disaster led to the identification of thousands of buildings throughout the UK in need of changes to their cladding.
In Crest Nicholson’s June results, it revealed that it had set aside £145m for future cladding liabilities.
Bellway first bid to take over the Surrey-headquartered developer in June, making an all-share offer valuing the company at £667m – 253p per share – representing a 17 per cent premium to its closing price that day.
Crest rejected the offer on the basis that it “significantly undervalued” the company.
Bellway revised its offer a month later, valuing the firm at £720m – a £70m improvement on its initial bid – which Crest Nicholson was originally set to unanimously accept.