Vistry to buy Countryside Partnerships in £1.25bn deal

Housebuilder Vistry said on Monday that it has agreed to buy Countryside Partnerships in a £1.25bn deal.

Under the terms of the acquisition - which has been recommended by the boards of directors of both companies - Vistry will pay 0.255 of a new Vistry share and 60p per share in cash. This represents a premium of around 9.1% to the closing Countryside share price on Friday.

Vistry chief executive Greg Fitzgerald 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 Housebuilding, 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."

At 1320 BST, Countryside shares were up 5.2% at 240p.

Victoria Scholar, head of investment at Interactive Investor, said: "Countryside put itself up for sale in June amid pressure from its largest shareholder Browning West which urged the company to become part of a larger business or go private. In April, Countryside issued a profit warning and suspended its share buyback programme. It previously rejected a takeover offer from Inclusive Capital which the San Fran based company this morning saying it has ceased formal negotiations with Countryside.

"Since the peak in August 2021, Countryside investors have had a tough time with the stock shedding around 60%. It has suffered from a slump in earnings and revenue brought about by its overly ambitious regional expansion plans, supple chain constraints, tough year-on-year comparables and one-off charges.

"As a result, Countryside has been strong-armed by shareholders to attract a suitor which it has found in Vistry Group, formerly Bovis Homes. Vistry’s share price has also struggled lately and with growing pressures from rising interest rates, build cost inflation and a slowing UK economy, both businesses may stand in better stead working as a team to take on the macroeconomic challenges."

Russ Mould, investment director at AJ Bell, said Vistry's takeover of Countryside Properties "is a bold move given the current backdrop, with a spiralling cost of living crisis, signs of a weakening housing market and rising interest rates".

“The two businesses seem a decent fit given they both operate in the realm of partnerships with local authorities and housing associations to build affordable housing.

"Vistry’s - or Bovis Homes as it used to be called - acquisition of Galliford Try’s housing and regeneration arm also looked ill-timed when it was announced just before the pandemic. That deal looks rather better in hindsight and perhaps Vistry’s latest deal will appear similarly astute a few years down the line."