Beazer pulls out of acrimonious tussle over Ideal
Wednesday 07 February 1996
Beazer withdrew yesterday from the acrimonious battle for control of Trafalgar House's housebuilding subsidiary, Ideal Homes. Having finally received the go-ahead from Trafalgar to challenge a pounds 170m bid from the rival builder, Persimmon, it pulled out yesterday saying it did not have time to make a considered decision.
The decision to step back from the fray puts an end to an ill-tempered interlude for the three companies. The rowing began after Trafalgar House offered an exclusive negotiating period to Persimmon, upsetting Beazer, which also claimed to have expressed an interest in buying Ideal.
Beazer said: "Discussions took place with Trafalgar's financial advisers on the terms under which information might be provided. However, following these discussions, Beazer Homes has decided that it cannot in the time available better the Persimmon terms."
Trafalgar House shareholders are due to vote on Persimmon's offer on 22 February. That deadline would have given Beazer little more than two weeks to finalise any planned bid.
Persimmon was given until the end of January to come up with a firm offer for Ideal, one of Trafalgar's most profitable subsidiaries. A week ago it confirmed a bid of pounds 170m, higher than the figures originally touted in the market and seen to be a sweetened, knockout bid.
The exclusivity period offered by Trafalgar to Persimmon caused a furore when it came to light because it was seen as a cosy deal stitched up between the Persimmon non-executive director Sir Chips Keswick and Trafalgar House, which is 26 per cent owned by the Keswick-controlled Hong Kong Land.
The deal, which Persimmon plans to part-fund with a one-for-two rights issue to raise pounds 91m, will boost the company from number eight to number four in the UK housebuilding market, behind Wimpey, Barratt and Beazer. Its output will grow from 3,600 to 6,500.
It is also forecast to enhance earnings per share immediately with the help of tax losses which are expected to trim the enlarged group's tax charge by 8 per cent for three years.
The deal is also good news for Trafalgar, setting it well on the way to wiping out a pounds 273m debt mountain. It comes in the wake of a pounds 321m loss from the conglomerate and follows the pounds 75m disposal of the Ritz Hotel.
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