Persimmon agrees to buy Westbury, becomes No 1 house builder

LONDON: Britain’s No 2 house builder Persimmon Plc. is buying smaller rival Westbury Plc. for 643 million pounds in what is considered as one of the biggest takeover deals in British housing industry. It is paying 560 pence for a share of Westbury, a premium of 13 per cent over the latter’s closing price on 11 November, when the buyout talks began.

The company formally announced today that it has already acquired 30 million shares constituting 26.2 per cent of the total holding.

It said the takeover will help it to build about 16,700 homes across the country in 2006, overtaking market leader Barratt Developments. The deal will also put the company in the FTSE 100 index, the first homebuilder to find a spot in the index since 1990.

Persimmon’s chief executive John White said the deal will give the company more buying power and expand its geographical coverage. Savings on administration and supplies are estimated to amount to more than 25 million pounds in 2006, rising to at least 40 million pounds the following year. The one-off costs related to the takeover have been put at around 12 million pounds. Its debts will rise to 1.2 billion pounds, including Westbury’s 270 million of borrowings, but White is confident he can reduce it by half in a year’s time.

Persimmon said it will close down eight offices, including Westbury’s head office in Cheltenham. This may lead to a “few hundred” job losses, the company said.

Two firms, Wimpey and Taylor Woodrow, were keen to buy Westbury but in view of Westbury’s board agreeing to the Persimmon offer, there is some finality now.

Westbury had reported a 26 per cent fall in its profits last month, which made it a target for takeover.

Westbury’s chief executive Nigel Fee is expected to gain 853,000 pounds by way of his shareholding in the company and around 500,000 pounds in salary compensation.