Countryside Properties puts itself up for sale after rejecting bids amid investor pressure and share price fall
- Inclusive Capital had previously made offers worth 220p and 295p-per-share
- Countryside has halted its share buyback programme while talks are ongoing
- Since the start of the year, the group’s share price has plunged by over a third
Bosses at Countryside Properties will begin a formal sales process after rejecting two takeover bids from one of its largest investors.
The FTSE 250 housebuilder revealed a fortnight ago that San Francisco-based hedge fund Inclusive Capital (In-Cap), which already owns 9.2 per cent of the business, had made takeover offers worth 220p and 295p-per-share, respectively.
Both unsolicited proposals were turned down by Countryside’s board on the grounds that they ‘materially undervalued’ the firm and its future growth prospects.
Turned down: Housebuilder Countryside Properties has already rejected two takeover proposals from the San Francisco-based hedge fund Inclusive Capital
Yet the company said it has decided to put itself up for sale due to significant pressure from some investors who believe it would be better placed to grow if it was privately held or was part of a larger business.
That included its largest investor, Browning West, which lambasted the board last week for taking actions that caused a ‘significant destruction of shareholder value.’
Countryside confirmed that In-Cap was one of its potential suitors and was the only one with which it was currently in discussions regarding a takeover offer.
While these talks are ongoing, the Brentwood-based firm has suspended the £450million share buyback programme it launched last year.
The group said: ‘In the event no such compelling proposal is forthcoming, given the board’s view of the significant potential for the business as a standalone entity, then the board is committed to Countryside remaining as an independent listed company.’
Since the start of the year, Countryside’s share price has plummeted by over a third, following a decline in home completions, profit warnings, and a damning review of its site operations.
That report highlighted major problems in its North of England and South Midlands divisions, with projects in the former territory hit by delays and weak margins, while the latter region had failed to turn a profit.
Particularly hefty criticism was reserved for the homebuilder’s Westleigh Group subsidiary, which was bought by the firm in 2018 in order to expand its partnerships division across a broader geographical base.
The review said the company had ‘failed to realise the benefits’ of its Westleigh acquisition, citing projects with ‘very low’ margins or that were ‘not completed to Countryside’s high standards.’
In-Cap’s founder and managing partner, Jeffrey Ubben, has also criticised the business over the purchase, as well as its equity financing arrangements and the appointment of Iain McPherson to the chief executive role.
Macpherson stood down from his position after just two years in January when the group issued a profit warning, and its share price tumbled to a five-year low.
Replaced on a temporary basis by John Martin, the firm subsequently reported a £181.5million pre-tax loss in its half-year results, compared to a £38.8million profit the previous year.
Much of the loss was down to costs related to removing dangerous cladding from buildings surging by over £100million, though the firm was additionally affected by a fall in new home construction.
Countryside Partnerships shares closed trading 1.96 per cent lower at 280.2p on Monday, although their value has grown by around a fifth in the past month.