- Persimmon considers £1bn bid for Cala Group
- Cala’s sale price expected around £1bn
- Auction managed by Rothschild, ends next week
Next week, Persimmon is one of the potential bidders for Cala Group, which its proprietor, Legal & General, has placed on the market.
One of Britain’s largest housebuilders is considering a £1 billion takeover bid for Cala Group, a rival player in the sector that has been placed up for sale.
Persimmon, which has a market valuation of £4.74bn, is considering submitting an offer for Cala before next week’s bid deadline.
According to city sources, Cala would be a formidable competitor in acquiring the property, as its homes have an average sale price considerably higher than Persimmon’s.
According to industry insiders, Legal & General (L&G) is auctioning Cala, which is anticipated to fetch approximately £1 billion.
The York-based company’s largest acquisition in years would occur if Persimmon prevails in the auction.
The company’s share price has increased by more than 20% in the past year under the leadership of Dean Finch, the company’s CEO and chairman, Roger Devlin.
In a trading update last month, Persimmon announced that it was on course to increase new home completions by up to 10,500 this year.
The Cala auction is scheduled to occur during a general election campaign that is anticipated to emphasize the importance of new housing provisions.
According to sources, both major political parties are likely to establish new policies to promote the expansion of the housing market.
They suggested that these could encompass Avant Homes, owned by Elliott Advisors and Berkeley DeVeer, and Taylor Wimpey, Persimmon’s larger competitor.
Persimmon is the third-largest housebuilder in the United Kingdom by market capitalization, following Taylor Wimpey and Barratt Developments.
In February, the Competition and Markets Authority identified eight housebuilders suspected of exchanging commercially sensitive information, including Persimmon and Taylor Wimpey.
Another major housebuilder’s acquisition of Cala, following Barratt Developments’ £2.5bn agreement to acquire Redrow, would underscore fresh momentum in the industry’s consolidation.
The potential transfer of Cala is the first substantial strategic move by Antonio Simoes, the company’s new CEO.
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Bankers are managing the auction at Rothschild.
Mr. Simoes characterized Cala as “a solid business” during an earnings call earlier this year, during which he was questioned about the housebuilder’s future ownership.
In 2018, the enterprise was entirely under the control of L&G.
A “challenging market” was the reason for Cala’s decline in half-year profits last autumn.
The company’s long-term objective is to construct 3,000 dwellings annually.
On Saturday, Persimmon and L&G declined to provide any commentary.
This weekend, analysts predicted that additional housebuilders would also evaluate proposals for the L&G-owned organization.
