Countryside Properties is listing itself for sale after rejecting offers amid investor pressure and falling share prices
- Inclusive Capital previously offered prices of 220p and 295p per share
- Rural areas halt their share buyback program as talks continue
- Since the beginning of the year, the group’s share price has fallen by more than a third.
Countryside Properties’ boss will begin the formal sale process after rejecting two takeover bids from one of its largest investors.
The FTSE 250 homebuilder announced two weeks ago that San Francisco-based hedge fund Inclusive Capital (In-Cap), which already owns 9.2 percent of the company, had offered to buy it for 220p, or 295p a share.
Both unsolicited proposals were rejected by the Board of Rural Areas on the grounds that they “materially undermine” the company and its future growth prospects.
Rejected: Homebuilder Countryside Properties has already rejected two takeover bids from San Francisco-based hedge fund Inclusive Capital
However, the company said it decided to put itself up for sale due to significant pressure from some investors who believed it could grow if privately owned or part of a larger company. would be better.
That included its largest investor, Browning West, who last week rebuked the board for taking actions that caused “material destruction to shareholder value.”
This confirmed that In-Cap was one of those potential suitors and the only one with whom Countryside was currently in talks for a takeover bid.
While those talks are underway, the Brentwood-based group has suspended a £450million share buyback program it launched last year.
The group said: “Unless there is such a compelling proposal given the board’s view of the significant business potential as a standalone entity, the board remains committed to remaining in rural areas as an independent publicly traded company. .’
Since the start of the year, the group’s share price has fallen by more than a third after falling domestic completions, profit warnings and a damning review of site operations.
That report highlighted major problems in the North England and South Midlands divisions, with projects in the former region hit by delays and weak margins, while the latter region remained unprofitable.
The developer’s Westley Group subsidiary, which the firm bought in 2018 to expand its partnerships division across a broader geographic base, drew particular criticism.
The review said the company “didn’t realize the benefits” of its Westley acquisition, citing projects with “very low” margins or projects that “didn’t meet high rural standards”.
In-Cap founder and managing partner Jeffrey Uben has also criticized the company for the buyout and its equity financing and the appointment of Ian McPherson as CEO.
McPherson resigned in January after just two years when the company issued a profit warning and its share price fell to a five-year low.
The company, temporarily replaced by John Martin, later reported a pre-tax loss of £181.5m in its half-year results, compared with a profit of £38.8m a year earlier.
Most of the damage was due to costs associated with removing dangerous cladding from buildings, worth over £100m, although the business was further impacted by the slowdown in completing the house.
Shares in Countryside Partnership fell 0.6 percent to £2.84 in early trade on Monday, even though its value has risen by more than a quarter over the past month.
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