The Board of Galliford Try has confirmed that it has approached the Board of Bovis and has proposed an all share merger between Galliford Try and Bovis - Bovis has initially rejected the proposal.

In a statement, the Galliford Try Board said it believes that Galliford Try has a strong future and had recently presented its five-year organic growth strategy to the market, which has been well received by investors.

The directors said they are confident in and committed to the delivery of this strategy, but believe that it could be enhanced and accelerated by the proposed merger, given its potential to:

• Deliver significant synergies through the optimisation of the combined group's operational structures, sourcing and operating practices.
• Create value for both Galliford Try and Bovis shareholders by delivering material improvement in key operating metrics.
• Create a new major housebuilder with national scale and geographic coverage through the combination of the 6th and 8th largest UK housebuilders by completions.
• Allow Bovis shareholders to share in the strong growth potential of Galliford Try, including benefitting from its leading position in affordable housing and regeneration.

Galliford Try has proposed to Bovis that the equity in the combined group would be split 52.25% to Galliford Try shareholders and 47.75% to Bovis shareholders.

On the basis of the share price of Galliford Try at close of business on 10 March 2017 this would value the entire issued equity of Bovis at £1,191m or 886p per share, representing a 7.0% premium to the closing share price of Bovis on the same date.

 Under Galliford Try's proposal, Galliford Try shareholders would receive the Galliford Try interim dividend announced on 21 February 2017 to be paid on 6 April 2017, and Bovis shareholders would receive the Bovis recommended final dividend announced on 20 February 2017 and payable on 19 May 2017.

The Galliford Try board said a further announcement will be made when appropriate.

Bovis initially rejects Galiford Try

Bovis Homes has rejected the bid – a statement issued by the Bovis Board said it has recently received written proposals from Redrow plc and Galliford Try plc outlining potential merger proposals. Redrow’s deal hadproposed a share and cash transaction for the Company.

The Board said it has reviewed the proposals and concluded that “neither reflected the underlying value of the Bovis business and therefore both should be rejected.”

The Board also concluded that the Redrow proposal was not in the interests of Bovis shareholders as the cash element of the offer would require shareholders to crystallise value at the current Bovis Redrow subsequently indicated that it was not willing to improve the terms of its proposal and discussions were terminated. Discussions with Galliford Try are ongoing.