The founder and former chairman of Redrow electrified the market yesterday when he substantially increased his shareholding and demanded an executive position on the board of the struggling housebuilder.
Steve Morgan, who founded Redrow in 1974 and now owns Wolverhampton Wanderers football club, has raised his stake in the housebuilder from 16.7 per cent to 23.46 per cent through his investment vehicles Bridgemere Securities and Durcan Investments.
Mr Morgan also has options to take an additional 6.46 per cent, which would take his shareholding to 29.9 per cent – the limit before he would have to reveal his intentions regarding a takeover.
Following the announcement, shares in Redrow soared by 15p, or 11 per cent, to 156.3p.
Mr Morgan's proposal could lead to a boardroom coup at Redrow, which last month posted a loss of £46.2m for the second half of 2008, compared with a profit of £35.8m for the same period in 2007.
In a statement, Redrow said: "Mr Morgan has proposed that he should join the board of Redrow in an executive role which, together with other proposals, would result in a fundamental change in the composition of the board." The housebuilder added it was "seeking clarity" on these board changes and other "critical aspects" of Mr Morgan's proposal.
For the six months to 31 December 2008, Redrow's sales revenues slumped by 58 per cent to £150m, compared with £353m for the previous year. On 24 February, with its interim results, Redrow said it had been "mildy encouraged" by the improvement in sales reservation rates in the first weeks of 2009 following a sharp downturn.
After founding Redrow, Mr Morgan oversaw its flotation in 1994. He stepped down as chairman in 2000 to focus on his wider business interests, including the De Vere Hotels group.Reuse content