Housebuilding shares boom in wake of takeover

SHARES in the house-building sector rose sharply yesterday after an agreed pounds 55m takeover deal excited the market. John Maunders Group, the residential property development company, announced it had agreed to a recommended bid from housebuilding company Westbury to strengthen its market share in the south of England and extend into the North-west.

The bid for Maunders, which builds residential homes, follows Westbury's 1996 takeover of Clarke Homes and is part of a consolidation movement by homebuilders seeking larger land holdings during a period of rapid construction growth.

"The board of Westbury believes that the acquisition provides an excellent opportunity for Westbury to take a significant step forward in its growth plans and will also further raise Westbury's market and land buying profile," the company said in a statement.

The offer will be made on the basis of 2.7 shares and pounds 14.72 in cash for every 10 Maunders shares valuing each Maunders share at around 219p a share.

Maunders shareholders will be entitled to an interim dividend of 2.6p per share for the financial year to 30 June.

The offer represents a 32 per cent premium over Maunders' share price of 165.5p at close of trading on Wednesday night . Yesterday, the shares were marked up 43p or 26 per cent to close at 208.5p. Westbury lost 4.5p to 272p.

The bid sparked enthusiasm for housebuilders' stocks with Bryant Group rising 5p to 154.5p, Barratt Developments up 7.5p to 284p, Beazer group ahead 6.5p to 217p and Berkeley Group gaining 10.5p to 731.5p.

Westbury said in a statement that it would raise pounds 34.7m, net of expenses, through a one-for-six rights issue of 15.08 million shares at 235p per share. The rights issue has been underwritten by Dresdner Kleinwort Benson with Panmure Gordon as its brokers. Dealings in the issue will start on or around 19 March.

The merged operations of Westbury and John Maunders is expected to deliver cost savings of around pounds 2.5m in a full year. Exceptional reorganisation costs would be pounds 1.5m in the first year.