Grove trust cuts George Wimpey stake to 5%: Speculation mounts over cash call at building group

GROVE Charity Management, the trust established more than 30 years ago to protect George Wimpey from takeover, yesterday cut its stake in the building and construction group from 34 per cent to 5 per cent.

The placing of 84.3 million shares, raising pounds 111.7m for the trust, was welcomed by Wimpey. 'We fully understand the trust's reasons for reducing its holding in the company in order to widen its investment portfolio,' Sir John Quinton, the chairman, said. 'We are pleased that the trust will remain a large shareholder.'

The shares were placed with institutional shareholders at 132.5p a share, compared with an opening price of 146p. Wimpey's shares closed 4p lower at 142p.

The sale increased City speculation that Wimpey will ask its shareholders for cash to finance its expansion. Wimpey aims to build its minerals division, where it has added aggregates reserves in the Republic of Ireland and the Czech Republic to its existing interests in Britain and the US. It also wants to increase the number of houses sold this year by 1,000 from the 6,380 completed last year.

Steve Charnock, building analyst with Charterhouse Tilney, said Wimpey would need 'serious money' to develop its minerals business. 'The interesting question is: does Wimpey have a rights issue? The answer is yes.' But he said yesterday's placing will have satisfied institutional demand for the shares, and the purchasers are unlikely to want to welcome a rights issue in the short term.

Joe Dwyer, Wimpey's chief executive, refused to comment on the rights issue speculation. But he admitted that Grove's stake would have made a cash call 'that much more difficult' as the trust would not have taken up its shares. 'It was not a bar, but it had to be taken into consideration.'

He dismissed suggestions that the sale could make the group more vulnerable to a takeover. 'If anyone made an offer for their stake, as a charity they would have been duty- bound to consider it.' He added that the sale would make it easier for the company to make acquisitions.

The trust was set up in the 1950s by Sir Godfrey Mitchell, who bought the company in 1919 and was chairman until 1973, and makes donations to a wide range of charities and projects. It reduced its stake from 49.97 per cent to 35 per cent in 1986 - when it realised about 174p a share.

Ken Costa of SG Warburg, the trust's adviser, said Wimpey accounted for 40 per cent of its pounds 270m assets and the trust wanted to diversify its portfolio and reduce the imbalance of having such a large holding in one company in that sector.

Wimpey's shares have more than doubled from last year's low of 65p, spurred by signs of a recovery in the housing market, but they are still considerably below the 303p peak achieved in 1989. But Mr Costa said: 'This was a good time to sell. It is good for the trust, as the shares have risen from 65p to 140p in a matter of months. And we were able to get it away with very tight pricing.'

But the sale comes as the group has halved its dividend to 5.25p as pre-tax losses escalated to pounds 112.4m, which wiped pounds 5.2m from the trust's income of pounds 21m. Mr Dwyer said the cut 'would not have gone unnoticed,' although he said the trust had made no comment on the decision to cut the payment, announced last September. One of the charity's directors, Desmond Graves, is on Wimpey's board and will retain his seat despite the sale.

(Graph omitted)

View from City Road, page 32

Start your day with The Independent, sign up for daily news emails
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Digital Marketing Exec / Online Marketing Executive

£35 - 40k: Guru Careers: Our client has a new role for a Digital Marketing Exe...

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Guru Careers: Management Accountant

£27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...

Day In a Page

General Election 2015: ‘We will not sit down with Nicola Sturgeon’, says Ed Balls

'We will not sit down with Nicola Sturgeon'

In an exclusive interview, Ed Balls says he won't negotiate his first Budget with SNP MPs - even if Labour need their votes to secure its passage
VE Day 70th anniversary: How ordinary Britons celebrated the end of war in Europe

How ordinary Britons celebrated VE Day

Our perception of VE Day usually involves crowds of giddy Britons casting off the shackles of war with gay abandon. The truth was more nuanced
They came in with William Caxton's printing press, but typefaces still matter in the digital age

Typefaces still matter in the digital age

A new typeface once took years to create, now thousands are available at the click of a drop-down menu. So why do most of us still rely on the old classics, asks Meg Carter?
Discovery of 'missing link' between the two main life-forms on Earth could explain evolution of animals, say scientists

'Missing link' between Earth's two life-forms found

New microbial species tells us something about our dark past, say scientists
The Pan Am Experience is a 'flight' back to the 1970s that never takes off - at least, not literally

Pan Am Experience: A 'flight' back to the 70s

Tim Walker checks in and checks out a four-hour journey with a difference
Humans aren't alone in indulging in politics - it's everywhere in the animal world

Humans aren't alone in indulging in politics

Voting, mutual back-scratching, coups and charismatic leaders - it's everywhere in the animal world
Crisp sales are in decline - but this tasty trivia might tempt back the turncoats

Crisp sales are in decline

As a nation we're filling up on popcorn and pitta chips and forsaking their potato-based predecessors
Ronald McDonald the muse? Why Banksy, Ron English and Keith Coventry are lovin' Maccy D's

Ronald McDonald the muse

A new wave of artists is taking inspiration from the fast food chain
13 best picnic blankets

13 best picnic blankets

Dine al fresco without the grass stains and damp bottoms with something from our pick of picnic rugs
Barcelona 3 Bayern Munich 0 player ratings: Lionel Messi scores twice - but does he score highest in our ratings?

Barcelona vs Bayern Munich player ratings

Lionel Messi scores twice - but does he score highest in our ratings?
Martin Guptill: Explosive New Zealand batsman who sets the range for Kiwis' big guns

Explosive batsman who sets the range for Kiwis' big guns

Martin Guptill has smashed early runs for Derbyshire and tells Richard Edwards to expect more from the 'freakish' Brendon McCullum and his buoyant team during their tour of England
General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'