George Wimpey recaptured its crown as Britain's biggest housebuilder yesterday after it snapped up John Laing's homes division in a deal worth about £300m.
The long-awaited sale of Laing Homes brings the former construction conglomerate to within a whisker of becoming a pure player in the private finance initiative (PFI) market.
Bill Forrester, Laing's executive chairman, said the deal provided the group with "financial muscle" to double in size over the next two years. He added that he was eyeing one or two acquisition targets.
Wimpey, primarily a mass-market housebuilder, is paying Laing £297m, including a £30m slice of intracompany debt. The amount, which is a small discount to the division's net asset value, will be paid in four cash instalments.
Peter Johnson, the chief executive of Wimpey, said the deal fitted with the group's strategy of developing a premium brand to increase the revenue it received from each plot of land. "We wanted an Audi alongside our Volkswagen," he said. Laing Homes has a strong presence in the South-East and the Midlands and the average selling price of one of its homes is £280,000, nearly twice that of an average Wimpey home.
The market broadly welcomed Wimpey's move, sending its shares 7.5p higher to 290p. Shares in John Laing slipped 2p to 143.5p.
Mr Johnson said the deal, which does not include Laing's US housebuilding arm, its luxury UK housing activities or its social housing operations, would enhance earnings immediately. Paying in four chunks would allow the group, which has one of the industry's shorter land banks, to press on with land purchases, he said.
The sale is the latest in a flurry of mergers and acquisitions in the sector. Last year, Persimmon bought Beazer Homes, Wimpey acquired McAlpine Homes and Taylor Woodrow bought Bryant Group.
Mr Johnson said consolidation remained "inevitable" in a still fragmented industry. Even with Laing Homes, Wimpey still has less than 10 per cent of the market.
Asked if the City apathy to the PFI sector had led Laing to question its decision to focus on infrastructure development, Mr Forrester said: "No. We are replacing a cyclical business with a predictable earnings business."
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