Bovis investor urges bid talks with Redrow

A top investor in Bovis has urged the troubled housebuilder to call off merger talks with Galliford Try and instead attempt to tease a sweetened bid out of another big rival, Redrow.

Bovis, a FTSE 250-listed company, revealed last week that it was in discussions with Galliford about a £2.5bn tie-up, but it had rejected a cash-and-shares offer from Redrow for being too low.

Richard Marwood, a fund manager at Royal London Asset Management and a top 10 shareholder in Bovis, told the Sunday Telegraph he would prefer Bovis to do a deal with Redrow, which is 40pc controlled by its founder, Steve Morgan.

Unlike Redrow, which focuses solely on houses, Galliford also has a construction arm, which builds everything from gas plants to railway stations.

“It would be potentially neater to do it with Redrow because it’s a pure housebuilder,” Mr Marwood said.

“It looks a cleaner deal. Obviously the level of the Redrow offer was less attractive than the Galliford offer so it would need to be increased.”

Redrow’s cash-and-paper proposal valued Bovis at 814p-a-share, while Galliford’s all-share merger valued it at 886p. Bovis shares closed at 914p on Friday evening.

Royal London holds a 3.5pc stake in Bovis. The housebuilder’s shares have plunged in recent months after a profit warning in December, which triggered the departure of chief executive David Ritchie less than a fortnight later.

It emerged last month that £7m in compensation had been set aside for Bovis customers whose homes were poorly built. It had also been offering home buyers £3,000 incentives to move into unfinished properties before the end of 2016.

Mr Marwood said of the company’s woe: “You’re building houses, you’re not building spaceships. It shouldn’t be that difficult to fix. Bovis probably could sort things themselves, but they would need to get a new chief executive on board and the turnaround might take longer to realise value for shareholders than a bid.”

Galliford and Redrow have until April 9 to make a firm offer or walk away, under Takeover Panel rules.

Bellway, another builder, posts half-year results on Tuesday. Analysts at Canaccord Genuity expect the company to report an 8.1pc rise in pre-tax profits to £245m.