When P&O put Bovis up for sale a year ago the business was valued at pounds 300m. In October it was estimated to be worth pounds 250m. However yesterday P&O announced that the house builder was to be floated for just pounds 225.6m, equivalent to 200p a share.
P&O put the blame on the turmoil in the world's stock markets. Fears that the housing market is beginning to slow after a succession of interest rate hikes have also caused shares in the housing sector to plunge.
A P&O spokesman said: "We are very happy with the price. You have to take into account that the overall stock market and the house building sector has fallen 10 per cent since October."
P&O also denied that it could have got a better price if it had sold Bovis earlier. "We would have to had to rely on 1996 profit figures which would have meant floating at a large discount. The general election also caused a lot of uncertainty," said the spokesman.
However analysts were scathing about the way P&O had handled the sale. One said: "As the value put on Bovis has tumbled its management team and P&O have lost a lot of credibility."
Another City observer said: "This sale has been botched from start to finish. It is stupid to float now with the housing sector where it is. Why not wait until it recovers?"
Malcolm Harris, chief executive of Bovis, admitted that house prices in the South-east had flattened out after a period of rapid growth. However he predicted that house prices should continue to rise by 3 per cent a year around the country.
P&O will use the money to invest in its cruise ships, the best performing part of its business. Dealings in Bovis will start next Tuesday.