Berkeley merger hopes lift Bovis but City doubts deal

Building giant: A Bovis Homes investor has written to Berkeley Group, led by Rob Perrins and Tony Pidgley, urging it to consider an all-share merger

Justin Sutcliffe

Russell Lynch23 January 2017

Bovis Homes shares rose on hopes of an all-share merger with Tony Pidgley’s Berkeley Homes on Monday, despite a flood of City scepticism over the likelihood of a deal.

The housebuilder, which ousted its chief executive two weeks ago and has come under fire for offering cash to would-be buyers to move into unfinished homes, rose 4%, or 33.35p, to 830.35p after reports that Schroders fund manager, an 8.1% shareholder in Bovis, had written to Berkeley suggesting a deal.

Bovis' David Ritchie will stay with the company until the end of next month to help hand the business over to interim boss and current finance director Earl Sibley.

Analysts believe a tie-up with Berkeley is unlikely.

Jefferies analyst Anthony Codling said: “With land in plentiful supply and prices softening in the wake of the EU referendum, why would any company want to pay a premium for land?”

Liberum added: “Berkeley has not done major acquisitions before and has plenty of its own opportunities in the land market.”