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Merits of Crest Nicholson merger far from clear for Bellway as deal nears approval

Date: 10 July 2024

1 minute read

10 July 2024

If you are covering Bellway’s increased offer for Crest Nicholson, which the Board of Crest Nicholson is minded accepting, please find below a comment from Oli Creasey, property research analyst at Quilter Cheviot:

“Bellway have announced this morning a revised offer for Crest Nicholson, increasing the terms of the offer in terms of number of shares to 0.099 Bellway shares per Crest Nicholson, plus a 4p dividend.

“While this is an increase in terms of what Crest Nicholson shareholders would receive compared to the previous offer (0.093 shares), the increase in pound sterling terms is marginal given the decline in Bellway’s share price since the first offer was announced in mid-June. However, the Crest Nicholson board has stated they “would be minded” to recommend the latest bid unanimously. The new bid also extends the put up or shut up deadline to mid-August, giving both companies longer to complete the required due diligence ahead of the merger.

“The merger seems attractive to Crest Nicholson shareholders, who will get a stake in a larger, better run business. The merits for Bellway shareholders are a little less clear – they will become owners of a bigger business, and the Crest Nicholson brand is complementary to Bellway’s existing business as it tends to build higher value homes. However, it also relies on Bellway’s management getting more from the Crest Nicholson business than current management have – far from a guarantee. As usual, when it comes to mergers and acquisitions, the proof of the pudding is in the eating.”

Gregor Davidson

Senior External Communications Manager