Redrow buys Tay Homes for £29.9m

HOUSEBUILDER Redrow is to buy rival Tay Homes in a £29.9m deal agreed by the two companies. Redrow, based in Flintshire, Clwyd, is paying 110p-per-share in cash for the group, which rejected a bid from property outfit Country & Metropolitan in July.

C&M still holds a 26.2% stake in Leeds-based Tay and its shareholders will have to approve the sale of the holding to Redrow for the deal to go through.

Redrow chief executive Paul Pedley said he looked at Tay Homes as soon as C&M was 'locked out' following the failure of its £31m all-share offer. He added: 'We chose Tay Homes for two reasons, the geographical fit and the fact a lot of their sites are suited to our Harwood brand.'

Pedley said Tay's existing operations in Yorkshire and Scotland meant the group's number of annual completions in both areas would double. He added Tay's sites would help to establish the Harwood residential brand launched five years ago. Harwood houses typically sell for £75,000 to £110,000.

Today's move is the latest in a long line of takeovers seen in the housing sector this year. Persimmon has acquired Beazer, Taylor Woodrow has snapped up Bryant and Wimpey has splashed out on Alfred McAlpine's homes division.

Tay Homes' chairman John Maunders said he believed Redrow's offer represented the best route for shareholders to 'optimise the value of their shares'.

The 110p-per-share offer represents a premium of around 8% on Tay's closing price of 102p on Wednesday.

Pedley said it was too early to determine what savings could be made by integrating the Tay business, which employs 110 staff. But he added: 'Obviously when you have businesses that have an overlap there will be some savings.'

Redrow employs 1,100 staff across ten regional divisions stretching from the south coast of England to Scotland.

Pedley dismissed talk of a downturn in the market and said: 'The housing market is alive and well with a gentle growth in selling prices.'

Tay Homes' shares rose 6% after the deal was announced, 6p to 108p. Redrow slipped 1/2p to 242 1/2p.