Westbury buy cements Persimmon in FTSE 100

Click to follow

Britain's largest housebuilder, Persimmon, yesterday agreed to buy its smaller rival Westbury for £643m in one of the biggest takeovers in the UK housing industry

Persimmon is paying 560p a share, 13 per cent more than Westbury's closing price on 11 November, the day before talks were announced.

Rachael Waring at Numis said: "It's a good price for both sets of shareholders." She added that Westbury investors were getting a premium for an underperforming business, while Persimmon was paying less than other deals in the sector.

Persimmon, already Britain's biggest housebuilder by market value, said the takeover would put it on track to build about 16,700 homes across the country in 2006, moving it ahead of the current market leader Barratt Developments. Persimmon expects to enter the FTSE 100 index on 7 December on the back of the deal, the first such move for a homebuilder since 1990.

Chief executive John White said: "The deal gives us a great opportunity to achieve a lot of synergy benefits and we can integrate [Westbury] very quickly." It will give Persimmon more buying power and expand its geographical coverage. Savings on administration and supplies are estimated to amount to more than £25m in 2006, rising to at least £40m the following year, with one-off costs related to the deal put at around £12m. Persimmon said it would close up to eight offices around the country, including Westbury's head office in Cheltenham, leading to a "few hundred" job losses.