Re: again



Bovis & Gallford. The game is afoot here. Now to work through the no.s I suspect GT not as good as I thought (construction problems) but underpinned by the bid. I’ll be v interested to see the flipside, that is the acquisition impact on Bovis.

Arguably BOV are offering ca £5-90 ps in BOV shares (at today’s price) + £400m cash/debt = ca £3-60 ps into GT (not direct to the shareholders) + underwriting the pension fund. This to acquire the house building ops, ie the l/b. For which they are offering min £9-50 ps, say £10 ps given the pension fund assurance. With a GT market price £6-60 ps, Mr Mkt is saying GT has min -£330m construction black hole. Hmmmmmm … really?!

So my previous view was correct, despite the other tantrum poster.

The Bovis shares themselves look undervalued, per all builders. At intrinsic value the Bovis share element of the offer is probably ca £9 ps making the total offer worth about £13 to GT. As previously commented the question is how long/large the tail of construction problems. But I can’t see the GT construction stub coming out with a negative share price, though clearly it will not be a lot.